Here's a Simple Breakout idea, for Microsoft Stock ( MSFT )
Sometimes simplicity works just fine, despite all the advancements in field of speculation.
Just like how a simple scrambled eggs in the morning will provide similar satisfaction compared to the "Australian Black Truffle, Brooks Cherries and Braised Dandelion Greens" dish at a fancy restaurant.
Alright let's get to it~
1 From Apr 2013 to Oct 2014, Microsoft ( MSFT ) is pretty much zig-zagging upwards from $30s to around $49.00s
This is a steady uptrend lasting about over a year.
2 After the uptrend in 1, price has fluctuated violently around a fat sideways range between $40s to $49s.
However the we witness sharp support buying at $40s. It is as if the market refuse to value MSFT share price at no lesser than $40.
This Consolidation phase had also lasted for about a year.
3 26 Oct 2015 was a pretty significant trading day, as the reaction to the release drove prices to break out of the consolidation zone and trade above $50.00.
It is a strong gap up move and only way to catch this move will be enter into a long position before the Earning Release and significant risk on negative surprises.
It is also the day that the market tells us that it is resuming the overall upward trend.
Luckily for us, the Market has taken a breather in the form of a . Allow other traders to initiate long position and potentially drive prices higher.
Should this be broken, it is likely to continue the general upward momentum to move further away from the consolidation zone.
4 Coincidentally, we also observe that this is a potential 5 Wave pattern. The breakout will essentially complete the last wave of the pattern.
Let's draw our attention to the Momentum Waves (1) & (3). We observed that while (1) move about $4.15 and (3) did a increase move at around $7.29.
This shows and increased in upward momentum and there's a strong chance for the next breakout wave (5) to be even stronger than (3).
It is likely that price will breakout further on the upside.
Enter Long if Price can convincingly close above $55.45.
A projected move places the price target at around $64.00
A simple method will be to hold on to 100% of the long position and sell it around $64.00.
We can also consider partially closing long positions as price progressively hits minor price levels along the way.
A possible approach can be as follows:
Close 50% if prices reaches $58
Close another 30% if price reaches around $60
Close 20% when price reaches $64.00
As with all trading strategies, there is a risk of loss should this be actually be a Trap laid by the Market.
It is likely for MSFT to breakout higher out of a and coincidental 5 Wave pattern.
Enter Long if price > $55.45, 5 mins before closing.
Stop Loss Below $52.00 and looking at Target of $62.00
Have a profitable day!