ThinkingAntsOk

All the items you need for a long setup on ZOOM

Long
NASDAQ:ZM   ZOOM VIDEO COMMUNICATIONS INC
Let's see all the items we need to understand to develop a long setup on zoom

CONTEXT: It's essential to have a context aligned with our view before developing setups. In this case, our Context is a bullish ascending trendline that converges with a support zone , creating a great area to think about a reversion of the direction

STRUCTURE: Supported on the previous item, we can see a FLAG Patter. From a technical perspective, flag patterns are considered continuation structures, meaning that after the breakout of it, we should see a continuation of the price in the previous direction before the consolidation.

TARGET: To define our Target, we use Fibonacci Extenssions; in this case, you have to identify the previous impulse before the correction and draw the extension from there (if you don't know how to draw fibo extensions check the link to related ideas. There you will have a full explanation of it) / Its imperative to always have Risk Rewards ratio above 1.5 on your trades, in this case, we have 1.9 so we are good.

SETUP: Now that all the previous items are OK, we will define our Entry level above B / Stop loss below C / Break-Even level on the first Fibo Extension / Final Target on the 2nd fibo Extension.

RISK: Your account will always be protected if you risk 1% of your trading capital on any given trade; that way, you can absorb losing trades without compromising your whole account.





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Comments

thanks for sharing great ideas, please how can I get the link on how to use the Fibo Extension
Reply
@David2776, Thanks for your comment. This is the Trading View link
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It is not too low for the stop loss if I entered @ Entry Level? That is more than 50% drop. Will not be better 5-10% stop loss at the entry level?
Reply
@trutano, Hi, when we are defining our stop loss, we always use Technical levels instead of fix %. In this case, our stop would be below the last support zone (if the entry is executed, of course), which provides us a zone where we now buyers were active there.
Reply
Nice!! one question though, why not entering now?
Reply
ThinkingAntsOk WinstonWallace
@WinstonWallace, Because we always wait for confirmation and a change in the trend before opening positions. IF the price breaks above B, we will be entering above the previous resistance zone. IF we enter now, the price can keep falling, and we don't want to be guessing the bottom of the movement.
Reply
PowerOfCapital ThinkingAntsOk
@ThinkingAntsOk, Your trading style is quite safe, waiting for breaking B to enter will confirm ABC movement finished. Lets see how it unfolds.
Reply
PeterSl WinstonWallace
@WinstonWallace, I would actually agree with Winston, entering with tighter stops may make more economic sense. ATR of the stock is sub-20, so you can risk 15-20$ on a trade and still be correct at a much better entry price. It moved now to a logical entry zone of the previous break-out so stop placement is easy. Obviously, trading styles and account sizes differ, so we may respectfully differ in our assessment. Thanks for sharing ThinkingAntsOK!
Reply
@PeterSl, Yes, of course, your risk-reward ratio is going to be higher if you enter now. However, you are winning that, and you are losing safety. That's up to the risk tolerance and expectation of each trader. Our trading philosophy prefers a 1.9 risk-reward ratio with an average win rate of 45-50%. Rather than a risk-reward ratio of 3 with an average win rate of 25-30%. These are the beautiful things about trading styles and methods.

Thanks for sharing your comment, Peter!
Reply
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