We covered a potential trade set-up in DE, we don't want to chase trades, we want them to come to us on our terms and then decide if they still looks like strong candidates and be picky about them.
DE was looking like a strong set up,
I posted it Monday and the first breakout we were looking for took place today. If you aren't familiar with the set up you should check the initial post linked above.
I would consider DE a longer term core short position and a good candidate for a phased in entry, although I'm not quite there yet in terms of starting that process, I think DE could give some better signals before any phased entry and it may still hit the second target.
DE and the two resistance areas that were the minimum targets for a head fake move and downside reversal, we are through the first which was the most obvious with local resistance so clear on a Dow component stock.
Here's a closer look, this was a magnet, all of the orders just sitting up there, now do we make it to the next level? It's hard to say just yet and the market's overall tone will be a big part of answering that question.
The 5 min chart should be able to make a new high by now and confirm so it looks like we are seeing some distribution in to this move up, I wouldn't say it's a strong signal yet, but on the right track.
The 15 min chart will be an important measure of DE's strength, you can see how small the accumulation area (white) was, just enough to get DE up and likely a lot of Specialist action in stocking inventory. In any case, there's no confirmation here either, no new high, but it is trying to keep up. I'd rather wait until there's a clear star-step negative divergence here before jumping in to DE short.
Keep your eye on the broader market as well if you are interested in DE, it will likely be the main gravitational force on DE's direction near term.
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