SNAP appears to have been in a correction cycle following the mid November drop from 57 to 47, which is part of a much longer term correction cycle from the ATH of $83. Looking back at the entire price action, it is very clear that the SNAP run-up was due to a very well-defined Elliot wave cycle (if only they could all be this beautiful):
This wave count is confirmed by the Recognia algorithm, which predicted a wave A bottom around $41:
"Recognia has detected that Snap Inc (SNAP on NYSE) has entered Wave A of its Elliott Wave cycle. This bearish signal indicates that the price may fall from the previous close of 55.14 to the next Elliott Wave target price of 41.12."
In the main chart you can see that SNAP has been looking for this bottom and moving through a head and shoulders reversal pattern. On the 30m chart this HS reversal breakout has as neckline right at the 51.40 resistance. However, on the lower 5m timeframe the the price action seems to be losing momentum after a rejection off the 30m resistance. This can be seen by the 5m head and shoulders top formation with a neckline coinciding with a 1Hr support:
This pattern could signify the beginning of the Wave B correction cycle which could see a price increase to as much as $71 depending on the overall state of the market:
Short term options trades:
A failure to hold the 1hr support and subsequent fall below the 50Ma would trigger a short entry, while a close above the 30m resistance would trigger a long entry. As I wrote this the price action also formed a bearish shooting star, which could signify the bearish sentiment may win out.
Long Term options/stock trade:
long term DTE bullish strap option strategy paired with 25 shares with exit points at $56, $61 and $71
This wave count is confirmed by the Recognia algorithm, which predicted a wave A bottom around $41:
"Recognia has detected that Snap Inc (SNAP on NYSE) has entered Wave A of its Elliott Wave cycle. This bearish signal indicates that the price may fall from the previous close of 55.14 to the next Elliott Wave target price of 41.12."
In the main chart you can see that SNAP has been looking for this bottom and moving through a head and shoulders reversal pattern. On the 30m chart this HS reversal breakout has as neckline right at the 51.40 resistance. However, on the lower 5m timeframe the the price action seems to be losing momentum after a rejection off the 30m resistance. This can be seen by the 5m head and shoulders top formation with a neckline coinciding with a 1Hr support:
This pattern could signify the beginning of the Wave B correction cycle which could see a price increase to as much as $71 depending on the overall state of the market:
Short term options trades:
A failure to hold the 1hr support and subsequent fall below the 50Ma would trigger a short entry, while a close above the 30m resistance would trigger a long entry. As I wrote this the price action also formed a bearish shooting star, which could signify the bearish sentiment may win out.
Long Term options/stock trade:
long term DTE bullish strap option strategy paired with 25 shares with exit points at $56, $61 and $71
Comment:
I want to add this to go into more detail while I am still neutral on the trade: