MU stock: Playing the bounces off Fib levels. Easy as A, B, C
Well, I must first admit, I am publishing this chart in retrospect as I've just now taken the time to really analyze MU in this way. Unfortunately, I missed some massive profit opportunities, but this is certainly a learning experience for the next time around and....there may be one more trick (trade) left up this chart's sleeve.
So as you can see from the chart, as MU has pulled back from its high around $63, it has bounce nicely/sharply off each Fibonacci retracement point (for a gain of about $3-4 each time). This set up is a day traders dream. In and out of a trade with significant profit in a very short amount of time.
First bounce (labeled A) off the 38.2% level was good for almost $4...nice! I'm not really paying much attention to the 23.6 level, though there was a bounce in that region. This bounce also coincided nicely with a trend line that formed a 5 wave pattern....even better (see the pink line).
Second bounce (labeled B) was off the 50% level (okay....not technically a Fib number). Again this was good for $2.70! Also, this happened to fall right on a nice trend line to create another 5 wave pattern (I don't have all these waves drawn in because the chart would be very congested, but hopefully you can visualize them on the blue line in the chart above).
Third bounce (labeled C) was off the 61.8% level and was again good for over $4. Again, there is a legitimate 5 wave structure that could be formed here on the gold/orange trend line.
So the question is: Does Micron continue its fall or does it bounce up from here and start a new bullish move?
I honestly have no clue, but I can tell you one thing: if it falls through the gold trend line, I will be watching for a touch to the Fib 78.6 level at a price around $43.19. I may go long a call option here, I may buy shares, or I may sell a put just below this level (or maybe I'll do one or more of the above) for a quick trade expecting a move between $2 and $4. I'd not get greedy though, and I'd look to take profits early. I'd certainly keep a tight stop loss, because if MU gets beyond this level without a bounce, next stop may not be until it hits $37-38.
Certainly, the bulls could regain control here at the 61.8% level...this would make a fantastic retracement for a very bullish wave 1 up/2 down as part of a larger 5 wave structure to take MU significantly higher (remember all those analysts predicting MU at $100). A 1.618 extension of a larger Wave 1 with Wave 3 starting off the 61.8% level would give MU a Wave 3 target of $89 (not something to ignore) . I'm staying neutral at this time and will let the chart tell me where MU is likely headed next.
Thanks for reading and giving this idea a thumbs up if it helped you in any way!
Bonus points for anyone that can draw the trend line that creates a potential 5 wave structure that intersects the 78.6% Fib level.
So as you can see from the chart, as MU has pulled back from its high around $63, it has bounce nicely/sharply off each Fibonacci retracement point (for a gain of about $3-4 each time). This set up is a day traders dream. In and out of a trade with significant profit in a very short amount of time.
First bounce (labeled A) off the 38.2% level was good for almost $4...nice! I'm not really paying much attention to the 23.6 level, though there was a bounce in that region. This bounce also coincided nicely with a trend line that formed a 5 wave pattern....even better (see the pink line).
Second bounce (labeled B) was off the 50% level (okay....not technically a Fib number). Again this was good for $2.70! Also, this happened to fall right on a nice trend line to create another 5 wave pattern (I don't have all these waves drawn in because the chart would be very congested, but hopefully you can visualize them on the blue line in the chart above).
Third bounce (labeled C) was off the 61.8% level and was again good for over $4. Again, there is a legitimate 5 wave structure that could be formed here on the gold/orange trend line.
So the question is: Does Micron continue its fall or does it bounce up from here and start a new bullish move?
I honestly have no clue, but I can tell you one thing: if it falls through the gold trend line, I will be watching for a touch to the Fib 78.6 level at a price around $43.19. I may go long a call option here, I may buy shares, or I may sell a put just below this level (or maybe I'll do one or more of the above) for a quick trade expecting a move between $2 and $4. I'd not get greedy though, and I'd look to take profits early. I'd certainly keep a tight stop loss, because if MU gets beyond this level without a bounce, next stop may not be until it hits $37-38.
Certainly, the bulls could regain control here at the 61.8% level...this would make a fantastic retracement for a very bullish wave 1 up/2 down as part of a larger 5 wave structure to take MU significantly higher (remember all those analysts predicting MU at $100). A 1.618 extension of a larger Wave 1 with Wave 3 starting off the 61.8% level would give MU a Wave 3 target of $89 (not something to ignore) . I'm staying neutral at this time and will let the chart tell me where MU is likely headed next.
Thanks for reading and giving this idea a thumbs up if it helped you in any way!
Bonus points for anyone that can draw the trend line that creates a potential 5 wave structure that intersects the 78.6% Fib level.
Comment:
Oops, 38.2% retracement (not $)
This is NOT a prediction. Just an exercise to see what such a move might look like. Personally, I'm bearish the entire market now, so I have a hard time believing MU could buck the market trend in such a way, though it certainly is possible. Bulls should really love chart above!!!