BreakOutArtist
Long

Time Warner Break Out Plan Can Now Be Executed

NYSE:TWX   TIME WARNER INC
371 4 10
Hi all!

This is the update to the TWX             Trading Plan, which aims to capture the potential bullish breakout move of an Ascending Triangle Pattern.

If you recall, the Traing Plan have the below conditions>

Initial Long Entry Condition:
Only when BOTH conditions A) AND B), listed below, are TRUE:
A) If price is does not do a daily close below the blue uptrend line at point 2.
B) Price can convincingly close a day above $88.50.

UPDATE
After the idea was posted, price was pushing to trade higher and was met with resistance.
On 02 July 2015, price closed at $88.49, just 2 cents away from triggering the Long Entry Condition of a daily close above $88.50.

From 06 July to 08 July, price encountered resistance selling and closed below the blue trendline at 85.81.
By closing below the blue trendline, the price would have invalidated the Long Entry Condition A)

However, price had rebounded strongly , especially on 10 July, where price strongly gapped up and managed to close at $88.63 on 11 July 2015.

It took 4 trading days, from 02 July to 08 July, to bring the bring down from 88.49 to 85.81.
Yet it took only 2 days, from 09 July and 10 July, to bring price back to $88.63 and meeting Condition B)

Therefore, due to show of buying strength of the bulls, I am excercising judgement and declaring that the TWX             Trading plan is still very much intact despite Condition A) is not met.

This also means that a Long Entry to TWX can now be executed anytime from now, as long as the last done price is above $88.50.


Initial Stop Loss:
Below $85.50 OR when price does a daily close below the blue uptrend line at point 2.

The reason for this trade is to capture the bullish breakout of an Ascending Triangle pattern.
Therefore, if price closes below $85.50 or fail to maintain the bullish trend line, it means that the breakout has failed and there are no more reasons left to maintain a long position.

Shifting of Stop Loss after entry:
If price manages to close above $90.00 after entry, we can consider shifting the stop loss higher to $88.50.
Rationale is that if price is genuinely breaking out below, it should show a clean strong move up towards $98.00 and above.

Therefore this shifting of stop loss is a conservative approach to protect risk capital.

Taking Profit: $98.00 or when price closes below blue trend line at point 2.
The theoretical measured target for an Ascending Triangle is around $98.

Risk:
There is a risk that the breakout move is a bull trap and fail.
There is also the risk of Earnings Release on 05 Aug 2015 will drive prices lower.

Flipping Around to Short if Long Squeezed:
In the event the stop loss conditions are triggered, it will mean that the Ascending Triangle pattern has failed and loss has been incurred.

It is also likely that this failed pattern will lead to a long squeeze move with enough momentum to push prices towards $82.50 and even lower.
Therefore more advanced traders may consider turning around and go short when the stop loss conditions are triggered, to capture this long squeeze momentum .

Reference:
Ascending Triangle 1> http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:ascending_triangle_continuation
Ascending Triangle 2> http://thepatternsite.com/at.html

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yujingr
a year ago
snapshot
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BreakOutArtist PRO yujingr
a year ago
Hi yujingr,

Care to elaborate on the Chart that you have shared?
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yujingr BreakOutArtist
a year ago
just few trendlines i've drawn, i agree with the long trend, but i would only trade long if it goes above the green. You have a really detailed trading plan. Like it a lot!
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yujingr yujingr
a year ago
What I am most confident with my lines is the 86.21support, the green line just to make sure the long trend stands, or maybe it would form a new triangle, then i would trade when it comes down to 86.21.
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