AMD Trade Management

For now this is a trade management post for AMD which is a long position we took on and it's at a little profit so we want to keep that and potentially even more on a quick move, but you'll need to pay close attention to it or set a price alert if you can.

For those who may want to get involved with AMD long, just be patient and I think you'll get your chance.

 AMD 60 min is a classic set of market manipulations that are used against technical traders because they don't adapt. Technical traders believe in strict discipline, many think if the trade went wrong it was because you didn't show enough discipline. With that much blind faith in T.A. it's no wonder these guys are so predictable and so easy to take advantage of. If you pay attention to the market, you'll see these things I'm about to point out, over and over again and on all timeframes and every asset.

First AMD has a very clear range, it's a rectangle which is a basic T.A. charting price pattern that represents consolidation and continuation, the rectangle has no inherent bullish or bearish bias, just like a symmetrical triangle, their bias depends on the preceding trend which was down. So Technical traders see AMD's rectangle and they expect it to break to the downside and because discipline is so important to technicians, they will most often wait for price to break below the support of the pattern, telling them it's time to go short AMD. As you can see, shortly after that there was a spike that would have taken out and triggered ANY  "Buy to Cover" orders or "Limit Buy' orders placed on the books (with your broker).

I never place orders or stops until I'm ready to physically place the order myself. If you put your orders in with your broker they are there for everyone to see and you might say, "Who cares? Why would they care about my small order?" I can only tell you that the last time I put a stop order in with my broker was when I went on a cruise, it turns out that my stop was the low of the day and the stock went on to close up over 5% that day and nearly 20% over the next few days and I took about a -15% loss! Also never put your stops/orders at obvious places like support/resistance, moving average, price pattern levels and especially NEVER at a whole number or even an even number like $8.50. There's a reason stores always uses $.99 rather than $1.00, the human mind gravitates toward whole numbers.

So after all the orders were flushed from AMD and it broke to the downside drawing in shorts, it trapped them as it went above the rectangle and as they were at a bigger and bigger loss, they cover which sends price up more which causes more to cover and more to buy, it's a momentum snowball and it i as predictable as you can get.

Now we have a bullish ascending triangle which is a consolidation/continuation pattern, it has the preceding uptrend which confirms the pattern and it has the correct diminishing volume as the pattern is traced out. The white arrows in the price window are how technical traders believe AMD will move, that's pretty simple to manipulate, even though I still like AMD long a lot. However, you can use this manipulation to your advantage.

 This is the long term trend in AMD (4 hour chart), from distribution to a confirmed downtrend to a leading positive divergence/accumulation, so I think AMD has a lot more upside to go eventually.

The 60 min chart shows the accumulation at the base and the relative negative divergence suggesting a pullback which may just be a move with the market as most stocks do follow the market.

Here's the plan,

To get downside momentum going for a pullback a bull trap would be most useful. Since this bullish price pattern is complete, all it needs is a breakout that is strong enough to attract traders'  attention and get them to buy. We should see a negative divergence in to this buying, but price should make a very nice move on the upside, as long as there's negative divergences in to the breakout, we want to sell in to that breakout, maybe 5%, maybe more. You can use  trailing stop or 3C, but using the manipulation should get you the best exit price.

Then the longs who bought the breakout will be trapped at a loss on the pullback, their selling will move the pullback with increased momentum and for anyone wanting an AMD long position we just need to watch for accumulation of the pullback and buy AMD at a lower price level.

If this goes right, AMD's price pattern should look something like a "Cup and Handle" and we should be able to re-enter at a lower price, less risk, higher probabilities and with an excellent exit on this leg of the trade. So set some price alerts to let you know when a breakout starts, then we watch for negative divergences to know when to sell.