TWTR Symmetrical Triangle Break Weekly Options Play
Description
TWTR has broken out of a Symmetrical Triangle consolidation pattern following the previous breakout of the large broadening pattern circled in yellow and breaking down its major trendline (3pt up-slanting blue line).
Symmetrical Triangles are a congestion pattern representing indecision and typically forming in an already established trend before a further move in the direction that preceded the pattern.
Here we see a large spike in volume at the beginning of the pattern, followed by descending volume throughout, and eventually the large spike in volume on the breakout, beyond the safe 3% margin, on 4JAN making a textbook "coil".
An additional technical indicator is the MACD convergence.
The resulting price move implied by the pattern is equal to price move that preceded the pattern.
Here I am using the long candles on 10NOV following the breakout of the broadening pattern as the starting point, giving a pattern-implied price move down to ~32.
Our price target will be more conservative @ 34 due to the expiration of the position.
Using a Long Put to remain long volatility and short stock.
Long Put
Levels on Chart
SL is a daily close back in the triangle
PT : 34
*Stops based off underlying stock price, not mark to market loss
The Trade
BUY
2/4 40P
R/R & Breakevens vary on fill.
Manage Risk
Only invest what you are willing to lose
TWTR has broken out of a Symmetrical Triangle consolidation pattern following the previous breakout of the large broadening pattern circled in yellow and breaking down its major trendline (3pt up-slanting blue line).
Symmetrical Triangles are a congestion pattern representing indecision and typically forming in an already established trend before a further move in the direction that preceded the pattern.
Here we see a large spike in volume at the beginning of the pattern, followed by descending volume throughout, and eventually the large spike in volume on the breakout, beyond the safe 3% margin, on 4JAN making a textbook "coil".
An additional technical indicator is the MACD convergence.
The resulting price move implied by the pattern is equal to price move that preceded the pattern.
Here I am using the long candles on 10NOV following the breakout of the broadening pattern as the starting point, giving a pattern-implied price move down to ~32.
Our price target will be more conservative @ 34 due to the expiration of the position.
Using a Long Put to remain long volatility and short stock.
Long Put
Levels on Chart
SL is a daily close back in the triangle
PT : 34
*Stops based off underlying stock price, not mark to market loss
The Trade
BUY
2/4 40P
R/R & Breakevens vary on fill.
Manage Risk
Only invest what you are willing to lose
Trade active
Missed entry yesterday, Entry times are prior to 10:30 or between 1pm & 2pm depending on price action.
Trade active
Filled @ 1.75.Trade active
Averaged down, new AVG fill @ 1.51.Trade active
Cut 3/4 of position @ 2.63, +74%.Trade active
Added 1/14 39P @ .65 at 12:10pm.Trade active
Closed 1/14 39P @ .56, -14%.Trade closed manually
Filled last portion @ 2.8, +85%.Target not reached, I am closing here because I am focused on the week, not the month.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.