(1) Qihoo has been trading in an uptrend from May 2013, until Apr 2014 this Year. During this period price has risen from $42.20 to as high as 120.00s.
(2) After breaking the uptrend line mentioned in (1), Price consolidated sideways and subsequently formed an obvious Head & Shoulders Pattern. This bearish Pattern is confirmed when price broke out below the Neckline of $75.93 on 23 Sep 2014 and headed as low as $62.75 on 15 Oct 2014.
(3) Following the low of $62.75 on 15 Oct 2014, Price pulled back and was subsequently further resisted around Neckline price of $75.00, before continuing to trade lower. Therefore from the observed points so far, we project that price is poised to breakout below $62.70, to continue the bearish trend established by the Head and Shoulder Pattern.
(Break Out Condition) When price can convincingly close below $62.70
(Stop Loss) Above $68.50
(Target) $42.20, based on minor Support levels
(Time Limit) All Short positions should be closed by 19 Jan 2015
Generally price break outs can only sustain momentum for short period of time, before retracement and pullbacks starts to occur. In other words, we estimate that the bearish breakout price action should complete and achieve its price targets by 19 Jan 2015.
(Risk) As always, there is always risk of a false breakout, coming from a bear trap.
We have past the time limit (19 Jan 2015) for this idea and hence the idea is no longer valid.
It might be prudent to close Short positions if you have traded solely on the basis of these idea and re deploy the capital on other breakout ideas.
So far there is no breakout move and it is more of a general bearish environment causing prices to drift lower.
This why most of my ideas are about following the trend, because if the breakout move does not occur, the general trend can help to move prices in your favor and avoid having a losing trade.
BreakOutArtist
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Dear Friends,
Given the strong bearish move down yesterday, please take note that we have a New Stop Loss at above $62.40.
Have a Profitable Week!
luke1827
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Thanks for sharing your method for determining time stops. I know you are currently taking CMT level 3. I'm still deciding between CFTe vs. CMT. What made you decide to go with CMT? And as always, wishing you a successful trade.
BreakOutArtist
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Hi Luke,
I just happened to took a TA course 2 years back, which was taught by the then CMT Singapore Chair. (James Brodie). I was sold and just went along.
luke1827
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Congrats on passing level 3
BreakOutArtist
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Thanks Luke! How's it going for you?
BreakOutArtist
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Dear Friends,
QIHU price is currently trading at 61.33 and I am convinced it can close below $62.70 today.
Therefore the Break Out Condition has been met hence Break Out Confirmed!
luke1827
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Hey! I was wondering how you arrived at your 19 Jan 2015 time limit? Which technical tools did you use?
BreakOutArtist
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Hi Luke,
Thanks for liking the idea.
A) Basically we measure the number of "bars" it took to plunge down from around 102 to around 64, which is 37 Bars.
B) We are making the assumption that $75.00 high, on 2014-11-26, was the starting point of the next wave of bearish make.
Therefore we project this "37 bars time limit" from the $75.00 high, on 2014-11-26, and count 37 bars forward, to reach 2015-01-19.
C) Take note that this is just an estimation and not an exact science.
The projection in B) is based on the rationale that if this is a genuine breakout, then it should complete its bearish move with the same speed as the previous down move, if not faster.
Another example of using time limit is shown in a previous idea that I had written. If shorts were held past the time limit, we will run into the risk of pullbacks.
We have past the time limit (19 Jan 2015) for this idea and hence the idea is no longer valid.
It might be prudent to close Short positions if you have traded solely on the basis of these idea and re deploy the capital on other breakout ideas.
So far there is no breakout move and it is more of a general bearish environment causing prices to drift lower.
This why most of my ideas are about following the trend, because if the breakout move does not occur, the general trend can help to move prices in your favor and avoid having a losing trade.