Perfect Setup

Ok, this is what I'm looking for. It's a great setup of what I planned on doing yesterday.

 

1) Stock was up pre market

2) Support confirmed by the 3rd tick from the open on huge amounts of volume

3) Stock rallies to resistance and falls back on pre established support level

4) Stock rallies off support and breaks through resistance on huge amounts of volume and settles on top of resistance and makes it support

5) Market conditions were solid. Great economic news came out and volatility was down 5% from yesterdays huge sell off.

 

 

 

This second chart below is LDK. I paper traded this roughly a week ago and the setup is almost identical.

 

1) Stock was up pre market

2) Stock confirms pre-established support levels with huge amounts of volume at the open

3) Stock rallies and hit's established resistance and falls to confirm a new support level. Bearish and Bullish Candles bottomed out at the same levels

4) Rallies and breaks through resistance first level of resistance and hits second level and pullbacks.

5) Q's fell at open but rallied just before 7am PST

 

 

 

All I need to do now is have the patience to wait and wait for this setup to happen while ignoring all these stocks that rally around me. That's going to be the hard part.

Trades Setups

 

Both of these charts are 6 month charts. I really wanted to emphasize how strong these support and resistance levels were so I panned it out to 6 months.

 

ZHNE: Below is a beautiful setup. My jaw actually dropped when I saw this. There is so much support at 1.22 it's unbelievable. I can put a stop at 1.18 which is way below normal here on the chart and still be in my risk guidelines. Heck, I can probably even drop it to 1.17. The upside potential for this is solid. There looks like a bit of short term resistance at the 1.25 level but the highs today pierced it and got to 1.27. Once we get passed 1.25 it could be all uphill from here until 1.38-1.40 area.

Entry: 1.22

Stop: 1.17

Exit: 1.40

Risk: 3%

Potential Gain: 13%

Shares: 400

Risk/Reward Ratio: 4.0

Potential Holding Time: 2-4 weeks

 

Only downside I see to this is the amount of volume. It's barely trading around 120,000 shares. I don't like to trade stocks unless it's at least 250,000. We'll see what happens.

 

COSI: This is one is looking good. However, I need to see it test the support levels at 3.60 which are pretty strong but I don't like the look of that candle for today. The current entry target could be a little too low but I think it's a good spot considering the bearish candlestick that's represented for today and the strong support level which the candle closed at. It's kind of stuck in between.

 

Entry: 3.50

Stop: 3.36

Target: 4.00

Risk: 4%

Potential Gain: 16%

Shares: 140

Risk/Reward Ratio: 4.0

Potential Holding Time: 1-2 weeks