As PDD broke its major downward trendline , a long position with a good reward to risk ratio can be entered with a tight stop.
Factors leading to the decision: - The recent downtrend has been broken with decent volume - The 20ma was broken and held, pulling in moving-average traders off the side-lines - A recent low offers a perfect spot to put a logical technical stop
As always, respect a tight-stop. If it rips up, let it run and trail stops behind.
Comment
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Hitting resistance here, one could exit the trade, exit half, or let it ride
Trade active
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Took off half the position here with an inverse hammer showing possible reversal incoming. 18% gain for the first half of the position. Keeping a tight trendline under the lows of the recent move and any close below that trendline will cause me to exit the remaining half
Trade active
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Took off another 25 of the position. Letting the last ride up the ascending trendline under the recent lows
Trade closed manually
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Taking the remaining 25% of the position off as it failed to gain a new high today. 34% move with leverage, I'm content.
Based on your research do you think that we will possibly see a retrace back to the $35-$36 before a larger pop? It looks as though it always makes that type of play.
ericsolan
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@moretzdl, maybe. Right now the entire market is rallying so it might give it the energy to go without a retracement but who knows, we can't predict these things.
On trendline breaks, there's three common scenarios I find:
- a rally right out of the gate (best scenario for those who got in early)
- a retest (retracement) of the trend from the other side before the main event (early entries feel pain here)
- a failure (having a tight stop should protect for a small loss)
With that in mind, the best thing I can do is all my DD then just enter the trade, let my stop keep my losses small and let price do its thing.