BreakOutArtist
Long

Time Warner Inc Breakout Confirmed. Sit Tight and Let it Ride

NYSE:TWX   TIME WARNER INC
384 0 6
Hi all!

This is 2nd update to the TWX             Trading Plan, which aims to capture the potential bullish breakout move of an Ascending Triangle Pattern.

If you recall from the previous update, I exercised judgement and declared that the Break Out Trading Plan can be executed.
Also there's a portion of the plan that mentions about shifting of the Stop Loss>

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.

UPDATE 2
After the previous update, price had traded higher, from 89.89 on 13 July to close at 91.01 on 16 July.
Given the healthy price action, we can confirm that a bullish breakout has occurred.

Also we can consider shifting the stop loss higher to $88.50 slightly.

Rationale is that if price is genuinely breaking out above, 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.

The disadvantage of this approach it is that a higher stop loss makes it easier for market noise to trigger the stop loss and resume bullish price movement.

However, losing money in an initially profitable trade is always a much greater sin, versus taking in a break even trade.

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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