Update on $XLU: Prepare to Take Profit and Take it Quick
Hi Fellow Risk Takers,
Here is a an update on the Long Utilities ETF that I posted a while back.
The information is intended for those who do short to mid term trading and are currently holding long positions on $XLU.
If you have no position and are considering to go long, it might be better to stay on the sidelines and watch.
It might not be a good idea to enter long now, when this update is about taking profit.
(1) Trend is intact as always and overall environment is bullish.
(2) Price has accelerated above the upper trend channel in (1) and the rise in price is analogous to a vertical takeoff of a space shuttle.
One key characteristic of this accelerated price chart pattern is that the up move is unsustainable.
In other words, price is unlikely to keep on moving higher vertically forever.
Also we can expect sharp sell off the moment price has exhausted upward momentum (Example in Reference section).
Therefore the main idea here is to take profit before sell off.
Simple Profit Taking:
Close position when price is around $50.
Take note that $50 is simply a psychological price level, as human nature have the tendency to place significance to round numbers.
Advanced Profit Taking:
Close position when RSI(14) is about to reach 75.
The main concept is to take profit as close to the Resistance Level of the RSI Oscillator.
Time Limitation:
All long positions should be closed out by 06 Jan 2014, if the $50 or RSi level 75 has not reached by then.
References:
Example of Sharp sell-off After Acceleration: farm4.staticflickr.c...004_57497f156f_o.png
Accelerating Price Chart Pattern> blog.forex4you.com/t...bolic-curve-pattern/
Using Support and Resistance Levels of Relative Strength Index> Technical Analysis for the Trading Professional by Constance Brown, Chapter 1: Oscillators Do Not Travel between 0 and 100.
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Trading View: BreakOutArtist
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Here is a an update on the Long Utilities ETF that I posted a while back.
The information is intended for those who do short to mid term trading and are currently holding long positions on $XLU.
If you have no position and are considering to go long, it might be better to stay on the sidelines and watch.
It might not be a good idea to enter long now, when this update is about taking profit.
(1) Trend is intact as always and overall environment is bullish.
(2) Price has accelerated above the upper trend channel in (1) and the rise in price is analogous to a vertical takeoff of a space shuttle.
One key characteristic of this accelerated price chart pattern is that the up move is unsustainable.
In other words, price is unlikely to keep on moving higher vertically forever.
Also we can expect sharp sell off the moment price has exhausted upward momentum (Example in Reference section).
Therefore the main idea here is to take profit before sell off.
Simple Profit Taking:
Close position when price is around $50.
Take note that $50 is simply a psychological price level, as human nature have the tendency to place significance to round numbers.
Advanced Profit Taking:
Close position when RSI(14) is about to reach 75.
The main concept is to take profit as close to the Resistance Level of the RSI Oscillator.
Time Limitation:
All long positions should be closed out by 06 Jan 2014, if the $50 or RSi level 75 has not reached by then.
References:
Example of Sharp sell-off After Acceleration: farm4.staticflickr.c...004_57497f156f_o.png
Accelerating Price Chart Pattern> blog.forex4you.com/t...bolic-curve-pattern/
Using Support and Resistance Levels of Relative Strength Index> Technical Analysis for the Trading Professional by Constance Brown, Chapter 1: Oscillators Do Not Travel between 0 and 100.
Like it, Share it, Follow it~
Trading View: BreakOutArtist
StockTwits: stocktwits.com/BreakOutArtist
Twitter: twitter.com/BrkOutArtist
