Taking a Long Shot with MDTHi all,
Here is breakout idea, that will require possibly holding a long position for the longer term.
This is potentially suitable for traders looking to "re-invest" their shorter term trading profits.
1 MDT has been trending extremely well, since June 2013 to Feb 2015.
Over a period of about 33 months, price has channeled upwards, from around $38 to $79 on Feb 2015, returning an impressive 115% gain.
2 Of course nothing lasts forever and we see a consolidation phase, where price retraces aggressively to around 64 (-18%), before trading back to $78 levels on Apr 2016.
Please note that this is not a triangle pattern. To be honest I am not sure what fancy cute name to call this formation.
What I do know that this is a clear consolidation pattern, with a sharp rejection of $64,00, subsequent support buying above $72.00 and price is already trading above the resistance zone.
Projection:
Price is already breaking out an is likely to trade higher.
It is likely that the breakout might repeat the price action in 1, in the form of a slow and steady channel up.
Therefore a long holding period is highly advised in order to capture the full potential of the bullish move.
Entry Condition:
A long entry can be executed now, as long as price is no more than 81.50 and no cheaper than 78.50 and no later than 12 May 2016.
Stop Loss:
Below 78.00.
If price were to trade to the consolidation, then the breakout is no longer valid.
Taking Profit:
Looking at how price behaves in 1 , I will prefer not to assign absolute profit targets and simply let the price run its due course.
In other words, a long holding period is advised, in order to capture a potential steady increase in price trend.
Method 1: Profit can be taken at around $92. which is a simple technical projection from the height of the consolidation zone in 2 .
$100 is also another possible technical level to consider taking profit.
Method 2: Set up trendline as shown, set a alarm to notify you when price breaches the line.
Close the position when the alarm goes off, as it indicates that the trend might be an end.
It might be a long wait so patience is highly advised.
Risk:
Because this is a long term position, there's a risk that new fundamental information, especially earnings releases, may negatively affect the price.
Summary:
MDT has broken out of a 14 month consolidation zone and is looking to trend steadily higher over the long term.
Have a profitable day~
-BreakOutArtist
