RH
Update on price action on RH, as promised, we are tracking tis very closely as this trade, I feel, I has good potential and we are nearing an inflection point
I have laid out a series of price points which in the history of the stock price movement have acted as support/ resistance and its good to know these levels as important areas of congestion and times to have appropriate risk management tools around it
For those who have not read my previous posts on RH, lines covered in Red are past Res/ Sup lines. Important lines are :
1. CLOSE Above $229.64 (Previous price action high, signaling momentum in favor)
2. CLOSE Below $219.34 will negate our proposition to go long for the time being (previous low of most recent price action)
3. $244 would be the first target which may act as resistance levels ( previous peak)
4. $270 levels may be the 2nd target on the charts
I have also drawn a trend line when the stock moved into uptrend from mid 2019
In Nov 2019. The price broke below the trend line suggesting uptrend maybe over , however, it turned out to be a fake break out, hence the need to the price retesting and being rejected in important for a conservative trader
In the months of Nov and Dec, we saw price moving back above the trend line and find ing support in Dec 2019, with a nice bounce off the trend line.
At the end of Dec 2019, price again moved out below the trend line again and is trying to test the trend line again. Price can either be rejected from these levels or this could also be a fake break out.
The break out above 229.64 is critical on both fronts, it pushes us above the most recent price action high , as indicated in the charts and also pushes us above the trend line
Lets look at yesterdays price action: 17th Jan 2020
Bears, knowing that trend line has been broken, opened the day lower than previous day closing, suggesting their intention clearly that they wish to pull the prices further down. Bulls, however wanted to prove their supremacy and wanted to show their command on the field and pushed prices upwards.
Price made an intra-day high of $229.70,, which is above our entry point, however, couldn’t sustain the bears attack and bulls lost command, with price ending lower and the candle closing in red!
Its so important to look out for the close of the candle (in our case, close of the day, to be above our entry point. Yesterdays Intra-day highs could have given us wrong entry points.
Think about it this way. The reason to chose $229 levels as our entry point to buy on a future date, when the price was at $221 levels, was to have a day close above 229 to signify that a new high in recent price data has been made and previous highs may become support and also get a chance to review the candle on closing to identify strength of the market participants
In case we were to put a limit order and would have entered our position yesterday and order being executed, we would not have got a chance to review the candle.
Food for thought : This is just the beginning. What do you think. Who will win this battle between the bulls and bears. pLease share your comments below, it will be nice to hear your comments
Cheers
Comment:
RH continues to move in a range and has been trying to make a run towards the next resistance levels that is also our entry point 229.64. A close above this will be our point to take action, after reviewing the candles again. As we speak, over the last few days we have seen at least 2 failed attempts when eh bulls were shown the doors by the bears and the power tussle continues. This is an exciting contest and we must watch out for action around the established support and resistance zones.
Comment:
RH continues to find resistance with the upward resistance line. No entry yet.
