PCLN Follow Up

PCLN is a partial core short position, I recently said I'd like to add to it and fill it out above $1100, we are in the $1100 area now.

This is yesterday's update that is more comprehensive if you want to check it.

The recent gist was a couple of Channel Busters sent PCLN higher above its primary resistance/ new highs, however long term distribution has been in effect and we are watching for a short term head fake move with confirming signals to look at either a new short entry or add to position if that was part of your original risk management plan.

Here's what we have which is interesting.

 PCLN daily chart shows the two Channel Busters that create momentum in yellow, the last one sent PCLN up higher after it hit stops, sucked in new shorts and squeezed them. The yellow trendline is the primary target in a head fake move, but typically they head fake move is more pronounced. The move at the yellow arrow on Monday is high enough and the volume is good, but it isn't what I'd expect for a final move that really creates a bull trap and volume doesn't suggest it would have done its job as a head fake/bull trap move either.

This is where it gets interesting because PCLN forms a bull pennant right in the area, some know it as a bull flag, but the consolidation pattern (triangle) is a pennant (green area). This is a popular technical pattern, even the symmetrical triangle is well known if the entire bull pennant was not. Technical traders would be expecting an upside breakout from this "Consolidation/Continuation) price pattern.

 The larger/longer term (more powerful underlying trends) of the 60 min 3C chart shows a clear large negative divegrence in the area so it would seem there's a whole lot more distribution up here than accumulation.

 When looking at an intermediate 15 min chart which is still a very strong trend, we can see 3C DID NOT confirm the upside move at all, it's in a leading negative divegrence suggesting distribution and a likely head fake move being worked out as we see these in just about 80% of all reversals on every timeframe.

The white arrow is the smaller positive divegrence from the Channel Buster.

 Even the faster 5 min chart shows no confirmation of the bull pennant price pattern suggesting distribution in to higher prices.

However...

The much weaker, but more detailed 1-3 min intraday charts do show a positive divegrence in the triangle/pennant portion of the bull pennant and since we'd expect a head fake move and technical traders expect an upside breakout, it's only natural to assume the head fake move would be an upside breakout from the bull pennant and that's what the 1-3 min 3C charts seems to show. This, if enough traders follow Cramer's rec'd could be enough to cause that bull trap and allow smart money to move a large or create a large (short) position with that retail demand Cramer spent so much time this week trying to foster. I'd guess GS is involved here.

The 1 min chart shows the same inside the triangle or pennant.

I'd set and I will set price alerts both above and just below the triangle (in case of a Crazy Ivan shakeout) and any move above the triangle (breakout) that has decent volume, we can check for short term distribution as well, that would likely be our highest probability, lowest risk, best entry or add to area.

Don't forget to set price alerts around the intraday triangle.