Today were taking a look at SQ (SQUARE)
So SQ made a big move down for earnings around the $225 level.
This level is widely being considered as a "buy the dip" opportunity which very well may be. However obviously we are offering a different perspective and heres why:
Reason 1:
We spend more than 3x the effort (activity) on August 2nd than we did on February 16th to make the same level highs. (relatively, weekly outlook)
So if we have more participants and cant breach a new level we have to consider that perhaps long isnt the direction.
Reason 2: 235-240 zone was a big area that held as support for nearly 5 months. We finally broke down and closed from that level. So for Operators to immediately reclaim that level is just a less than probable event.
Reason 3: Although not very clear it appears we have completed the B corrective wave and are well into our C distribution wave. We are referencing Elliot waves here. A modest 1:1 ration gets us to the 200-208 destination. Note: 1.5x and 2x distribution waves are no stranger.
There are a few more things happening here that are subjective that I will leave off such as harmonic patterns and the overall type of bearish structure we are in. In this case I dont think we need to add that to the confluence. Theres enough to suggest a lower price is more likely than not going to be realized.
As stated I like the 235 to 240 maybe even 242 area for shorts/puts to be initiated.
If you were to go into a lower time frame like the 4hr or the hourly you can find a much more precise entry point with a more favorable risk profile if not this would be a 1:1 trade short.
So SQ made a big move down for earnings around the $225 level.
This level is widely being considered as a "buy the dip" opportunity which very well may be. However obviously we are offering a different perspective and heres why:
Reason 1:
We spend more than 3x the effort (activity) on August 2nd than we did on February 16th to make the same level highs. (relatively, weekly outlook)
So if we have more participants and cant breach a new level we have to consider that perhaps long isnt the direction.
Reason 2: 235-240 zone was a big area that held as support for nearly 5 months. We finally broke down and closed from that level. So for Operators to immediately reclaim that level is just a less than probable event.
Reason 3: Although not very clear it appears we have completed the B corrective wave and are well into our C distribution wave. We are referencing Elliot waves here. A modest 1:1 ration gets us to the 200-208 destination. Note: 1.5x and 2x distribution waves are no stranger.
There are a few more things happening here that are subjective that I will leave off such as harmonic patterns and the overall type of bearish structure we are in. In this case I dont think we need to add that to the confluence. Theres enough to suggest a lower price is more likely than not going to be realized.
As stated I like the 235 to 240 maybe even 242 area for shorts/puts to be initiated.
If you were to go into a lower time frame like the 4hr or the hourly you can find a much more precise entry point with a more favorable risk profile if not this would be a 1:1 trade short.
Trade active:
SQuare pulled into the range and started to distribute back down perfectly. At this point were moving our stops to a break even level. Let the trade run
Comment:
SQ Still developing beautifully. no reason to exit this trade
Trade active:
Beautiful sell down on SQ. We reached the 240 zone then came right back to 225. We are closing half the position and letting the rest run for next week with our stop loss still at break even.
Comment:
Pre-market SQ is sitting around 223. still strong hold to complete the selldown to 200
Trade active:
Running 215 on Square. everything is green on this one. At this point you could shave another half of your position or keep the strong hold.
Trade closed: target reached:
Successful trade. Lets do it again.
Comment:
SQ pulled right down into 208 which was our high target. Still running, maybe we will see a 200 flush but we are out of there. Retail can have the rest.
Trade closed: target reached:
safe to say we blew through the 200 price target. We did discuss and re-enter this trade to the 175 level in my private channels. SQ had huge bearish indicators, taking it one bite at a time.