“Since so much of the Japanese candle terminology is grounded on military terminology, we will look at stops in this context as well. Each trade you make is a battle –and you will have to do what even the greatest generals have to do: Make temporary, tactical retreats. A general’s goal is to preserve troops and munitions. Yours is to save capital and equanimity. Sometimes you must lose a few battles to win the war. The Japanese have a saying. “A hook’s well lost to catch a salmon”. If you are stopped out think of it as you would a lost hook. Maybe you will catch your prize with the next hook.”
Much brouhaha about the Twitter rally in the past few days has got me watching the chart quite closely. It is still in a downtrend, so I’m looking at this strength as an opportunity to get short the name. The only issue that concerns me is the chatter about Carl Icahn, though chatter is chatter and not a trade plan.
Looking at the weekly chart above, it is clear that there is definite supply from 41.27 – 43.94, and that the market is in a downtrend, making lower highs. I’ll be looking to get short into that – probably sometime next week I’d imagine. My stop is above the zone and I’ll be looking for it to print below 30. There really hasn’t been a “blow-off selloff” in this stock, so I am waiting for that before I consider getting long.