adatherton

Lithium ETF clean EW and support

Long
AMEX:LIT   GLOBAL X FDS
This ETF has completed a nice 5W down, very precise 5=1, The W3 is a bit short, although there's reasonable subwave in there. Add to that the support from 2013-2015 and more recently in late 2016, which is where we are now, and if W2 is .618 and W4 is 1.0 we have a fairly neat 1.618 to finally reverse at here. Climbing back to 29 allows me to place a wide stop of 21 under 2013 and 2015 lows and still get a 2.5:1 trade, shown by the green and red lines. The volume bars look quite encouraging close up, as well, it tails off into the decline.

The way to trade something like this is to think either the Oct 16 support of 23.35 will hold or it won't. If it doesn't, then we are straight down to 21.75, ie it's unlikely to bottom in between these prices. So you can either enter here and add at 21.75, not higher (but with the same 21 stop), or even wait for 21.75. Conversely if this is the bottom, we'll know when it breaks 26, allowing you to add (and move the stop up to 23).

One sore point is that the ETF keeping missing on earnings , presumably from its major component NYSE:ALB. Hopefully, this will get better, but the trade should be managed carefully through the next (Q3) earnings date, which for ALB is Nov 6th .
Comment: Perfect so far.
Comment: Still on track
David Atherton

Comments

HI David
Great analysis- what do you think of the trading over the pas week?
Reply
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