Fist Analysis. Learning about trading for about 4 weeks now.
Tried to use stock cycle and fib retracement, as well as trendlines of the last two days in conjunction with decrease in volume. Also taking into account that this the hottest stock at the moment amon retail traders which makes my bearish sentiment a bit easier to explain. ;)
Bearish myself, bought at 13,50. Plan to buy again when below 10.
Feedback is appreciated. Please tell me WHY my analysis is wrong. Here to learn.
Are you one of retail traders? ;p That gap will unlikely be closed because it's a breakaway gap and it's even on weekly level - personal idea. If it closes, probably you will not even think about to buy it lol ps. $13.5 is not a very bad price ;)
Goingdutch303
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@idktrading, Haha you could say i am. Just started out but really trying to do my DD.
I've looked into breakaway gaps. You're saying that these are unlikeley to close up?
So the RSI, MACD and momemtum aren't valid indicators here?
P.S. I shorted at 13.50 haha.
This will be a hard learned lesson about breakaway gaps. Or a great lessons about Oschillators :)
@Goingdutch303, RSI and MACD are both valid indicators, and in fact, the consolidation it has experienced these couple of days (probably tomorrow as well) aims to fix/cool down the RSI, but it does not mean it will drop that low to close the gap ;p
I thought you were talking about you long it at $13.5 lol, but if even you short it at $13.5, it might not be a bad price as well (I think we could see further consolidations in next days probably), it just depends on when you want to close out your position.
Goingdutch303
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@idktrading. Thanks for your input. Let's see what the RSI does. It's been in a constant overbought state for a while now.
Wanted tot put my analysis to the test and bought 13.315 at 7/7. Had a couple of chances to sell but aiming for at least 11.70 before doing so.
Natestradamus
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@idktrading, weekly gaps get filled too...just look at USO a few months ago. The weekly is overbought, outside the upper bollinger band, reversal candle with a gap. All charts act and react similar and this gap will be no different. I would say if it was because of an earnings report that you may be right, but odds are very high the first daily gap gets filled if not the 2nd as well.
idktrading
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@nfreed31, USO? "The weekly is overbought, outside the upper Bollinger band, reversal candle with a gap" Do you mind sharing with me the actual date of the week? I think for NIO is not only because it's a weekly gap but also it's a breakaway gap on the weekly level, so I think it's unlikely to be filled. The RSI is adjusting itself, but the price will not fall that much (maybe I should add another condition - "unless there will be black swam" haha)
Natestradamus
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@idktrading, back when USO gapped down on the weekly...that filled earlier this summer. So you think that TSLA won't fill its weekly gap either? TSLA has weekly bearish divergence and NIO correlates to TSLA. The stock went parabolic bc of hype just like the MJ sector and ever other thing that gets hyped. parabolic moves correct to a mean
idktrading
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@nfreed31, Tbh, no, I don't think TSLA's gap will be refilled either even I personally don't like its car (I do admire and respect Elon btw). Meanwhile, I think when we talking about "refilling the gap" - we may think about or add a reasonable time horizon to it - for such breakaway gaps, they will be unlikely refilled in short-term - and this short-term could be a couple of weeks on the weekly level, or a couple of days on the daily level.