When we can, I prefer to find trade candidates in advance, lay out what I'd like to see happen if I think there's a good probability of that happening and if it happens, then we can enter the trade on our terms, the stock has come to us, we have a better entry and less risk.
I have kept my eye on PCLN for a number of reasons, but now I believe it may be getting close to an actionable position, especially if the market cooperates for a brief time.
I like to start with a weekly chart, in PCLN's case, the tone of trade is relevant in this situation since about 2009, before that PCLN was advancing on increasing volume which is healthy, after it is advancing on decreasing volume, not so healthy.
Also in the yellow box PCLN has made it's first lower high, we found out how important recognizing the early changes in a trend are the last few weeks with currencies which led to this week's sell-off.
With a pretty wide Linear Regression channel on a weekly chart, PCLN pulled a Channel Buster in the red box, these always seem bullish, but they are a change in character that often leads to a fast move to the downside.
On a daily basis, my De-Mark inspired indicator has shown a buy spot and two sell areas, Bollinger Bands look to be narrowing and that may be for a directional move, I'm kind of hoping it's an upside move we can use to enter PCLN shorts, I'll show you that below.
The hourly chart in PCLN has broken down and is leading negative on a very important timeframe.
The 30 min chart has done the same in the same area.
As has the 15 min chart which saw a small accumulation area, but so far no confirmation of this gap up, there are several charts confirming weakness and that gap being unsupported is a further sign.
On a daily chart, I'd like to enter a short here on price strength, the red trendline would be one potential head fake breakout area PCLN might try for, we see these head fake or failed moves frequently before major reversals, there are two inks at the top right side of the site explaining Head-Fake moves.
The second area would be above the linear regression channel around the yellow box.
Basically we want to see if PCLN can make the breakout move and confirm that it is a head fake using 3C to see whether the move is confirmed or whether there's heavy selling in to the price strength, if there's selling, then we have a high probability, low risk short entry.
Keep PCLN on your radar.
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