Changing Directions - Buy HD Swing Calls under 298
I have to be fast with this one. Please see the chart indicators.
As I was describing in comments of my previous Swing Put post, you can recognize the Elliott wave pattern without knowing much about it. I only use the concept of 3- and 5-waves to make trading decisions.
Yellow dots show three waves down that complete a five wave pattern (3 down + 2 up). There should be a tradeable bounce after this. Also, red line indicates 3 waves down that match with the RSI-7 and stochastic %K dips (in green ovals).
Notice how RSI was much lower with the first two yellow dots, as compared to today. If price moves up tomorrow then this will be bullish divergence. Even if price goes a lower on Thursday RSI may still stay higher than the previous two drops.
Looking at Stochastic %D you can also see each yellow dot corresponds with a wave down. This is the third one below 20, which leads me to look for a counter move that will make a good trade. I have a very small position of 14Apr 300 calls and 13May 320 calls. If the idea does not work and HD goes below 295 I will exit with very little capital at risk.
As I was describing in comments of my previous Swing Put post, you can recognize the Elliott wave pattern without knowing much about it. I only use the concept of 3- and 5-waves to make trading decisions.
Yellow dots show three waves down that complete a five wave pattern (3 down + 2 up). There should be a tradeable bounce after this. Also, red line indicates 3 waves down that match with the RSI-7 and stochastic %K dips (in green ovals).
Notice how RSI was much lower with the first two yellow dots, as compared to today. If price moves up tomorrow then this will be bullish divergence. Even if price goes a lower on Thursday RSI may still stay higher than the previous two drops.
Looking at Stochastic %D you can also see each yellow dot corresponds with a wave down. This is the third one below 20, which leads me to look for a counter move that will make a good trade. I have a very small position of 14Apr 300 calls and 13May 320 calls. If the idea does not work and HD goes below 295 I will exit with very little capital at risk.
Trade active
Holding swing calls. Yesterday price formed a small doji candle, and today price made a reversal bearish open. Even if price falls a bit but stays over 294, I am okay to hold my calls. Daily RSI, and especially stochastic %K, are too low.Benefits of using less capital in a counter trend trade:
1. real capital loss is small if trade idea fails
2. options are cheaper so returns are greater if trade works
3. trader can stay comfortable holding position if it goes red before green (as long as trade idea is valid
Trade active
I think sellers are being shaken out. Bullish divergence on HD and 5min chart shows a nice 3 candle reversal when price broke 294. Longer term - see gaps above and take swing calls now for a lower risk hold. Choppy waters so use less capita. MA's are still bearish on MA but they tend to lag, while stochastic is bullish and RSI shows bullish divergence.Trade closed manually
Sold my 14Apr 300 calls, holding May calls for now but may close today as I do not like weekly look and markets are feeling more bearish now.Note
Daily chart shows consolidation after a big candle up, holding over MA. Bought calls near 306.80 to hold overnight. You can see this area as support on 30min chart.
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