PCLN Update

Yesterday PCLN made a significant step in the short position by breaking a trendline that was acting as support. Yesterday I showed you a short term positive divergence in this update and said, "we also have a positive divergence and the trendline is likely to be gamed a bit over the next few days." and, "we also have a positive divergence and the trendline is likely to be gamed a bit over the next few days."


This morning PCLN did exactly that.

 Here PCLN hits the trendline on the open and backs off a bit with the market.

 However, we now have a stronger positive divergence on the 10 min chart that has entered leading position. This would suggest to me a bigger bounce that will likely take out the trendline/resistance.

 However, I haven't turned away from my bearish stance on PCLN, it's just the game on Wall Street and it's going to be played. Here we see our current signal candle on a closing basis at the white arrow, a closing candle that has a low higher then the signal candle's high would effectively end the swing downtrend classification, otherwise, the candle would likely be considered noise in the swing trend. Another possible definition of the swing trend would be the reaction high at the candle after the signal candle. A break above that high could also be used to classify the trend.

You could also consider  trailing stop with a 50-bar average on a 30 min chart which has worked well. You could consider taking partial profits here and re-establshing the full position after this likely bounce is resolved. You have to do what you are comfortable with. As I said, I'm still bearish on PCLN and like the position short, however the market rarely moves straight down and we have to have an objective way n which to define the trend and decide what we are willing to risk and where our line in the sand is. I prefer to make these decisions before the event unfold to eliminate emotional decisions, however, you should still leave room for updated analysis which may influence your original decision, so long as it is objective and non-emotional. I have a higher tolerance for risk, but I'm diligent about risk management, my personal choice would be to ride out any bounce at this point, it may just be a 1-day event considering today s Op-Ex Friday.