Very late Wednesday night I posted a PCLN target area,
"On the daily, PCLN already broke support, this is when we always see the volatility shakeout of the shorts, which happened today moving above resistance. There are two more levels, I don't think $750 is out of the question and that's where I'd love to get position started."
Today PCLN has reached that target area and then some, so it's time to take a closer look.
PCLN Going from a stable uptrend with expanding volume to a more parabolic trend with declining volume (volume should rise with price in a healthy uptrend). In red, a very parabolic move that looks like a blow-off top. For newer members, I NEVER trust parabolic move like this to hold, they usually fall just as spectacularly as they rise and with little relative warning-this is a 5 day chart.
The 60 min chart shows a cycle, these are planned moves by smart money, there's the accumulation period in white, the mark up period in red, also called stage 2, then we start to see stage 3)- distribution in red which typically is accompanied by a top formation, finally stage 4 decline completes the cycle. This 60 min leading negative divergence is a far cry from the confirmation of the trend at the green arrow and nearly as low as when the position was first accumulated. In other words, the trend implication of the underlying 3C trade is very bearish looking.
Yesterday you may recall the consolidation period, I was looking for smart money to step up with some intraday support to move prices higher, that happened market wide. This morning's gap on large volume and flat price trend since, looks suspiciously like churning, the handing off of shares from strong hands to weak hands, a form of distribution. Note yesterday's consolidation was just below one of our resistance target levels.
Today all 3 resistance target levels have been taken out. There's a chance PCLN goes for the ultimate head fake with a new high, but I feel comfortable entering at least a partial position here, I can certainly ride out a 3 or 4% draw down if push comes to shove. what is most important to me is the $750 level was taken out, this is where I wanted to consider PCLN.
1 min shows a negative divergence on the gap up today, you can also see the support from Wall Street yesterday as the market was stuck in a consolidation range.
The 2 min with a smaller cycle, we have relative negative divergences, negative on the open and as PCLN hits this morning's intraday highs, another leading negative divergence. These are not the really strong leading negatives I'd like to see, but it is still early, I don't think I'd be dissuaded from entering a partial position in the area.
The 5 min trend, 3C has been clearly trending negative, the relative comparison between the start of the divergence to the left and the end of it to the right is actually quite large when you look at the two relative price levels. In essence, the underlying trade looks worse now than it did at the $680 area.
The 15 min trend, this divergence is nearly as big as the first, sending PCLN lower.
Another look at the 15 min in the top area, it is leading negative.
I'd like to establish a position on stronger divergences, but I'm very tech heavy and the market can move fast. If I have time, I will likely enter a small equity short position (not using options) at this level.
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