So many individuals want price targets and entry points. However, many still lose money because they don't have a set timeframe in order to manage expectations. Below is an example of how you can get a feel of whether day trading or swing trading is good for you.
In this example many individuals have an eye on the EV space. Media has covered this space extensively and no one has garnered more media attention than the CEO of $TSLA Elon Musk.
However, competition is inevitable and here we have another competitor in $CCIV. As you can see the past several months the stock ran up from $10 to over $65 in 3 months! Over 550+% return!
However, it's now correcting and desperately trying to cling onto it's 50 Day MA. Overall the picture looks to be further downside. Determining entry points in this name is often tricky because conflicting views develop. Do you buy now and sell quickly? Buy and just HODL? This is where your style of trading comes into play. Just like every one has different tastes in music, everyone has a different risk tolerance and trading preference. Some want constant action and intraday fast movers(Day Traders) others want fast movers from a daily perspective they can hold for days and weeks on end(Swing Traders). You set the criteria as to what you plan to trade and how you plan to trade it.
Assessing a current situation
Hopefully this current situation helps you determine which style you will decide to do moving forward. On the left of this photo - you have a daily chart with a potential bullish set up here which is ideal for day/momentum traders looking for a quick pop. If price closes above $25 you have a high probability of targeting $40 to $35 quickly. However, if it doesn't you can go down to $15 area on this name just as fast. If you buy 1 share at $25 to sell at say $35 minimum you'll gain $10 per share. If you are wrong and decide to hold(not have stop losses) and it goes to $15 PT you will lose $10 a share.
That means you decide to risk losing $10 to make $10(1 to 1 risk to reward ratio). Not an ideal set up considering you are now in a downtrend. You want to make $2 minimum for every $1 you risk.
The right side which is a weekly shows levels of support where you want it to hold up. Many can make the argument that the risk of further downside currently is minimal given the tremendous weekly support. However, for our swing trading style we aren't after pops. We look for nice up and downtrends to establish positions and let our winners run.
So the next question may be, when is the right time to look to buy then? This name is in EV space with $TSLA which is why watching $TSLA is key. Stocks in similar industry groups(yes we know $TSLA isn't just EV but CCIV has followed it's Price Action) tend to bottom at roughly the same timeframe. Some lag and some lead.
Below is what we have for the PT in $TSLA which is just an undercut of it's 200 Day Moving Average
Our recommendation for a purchase in $TSLA would be around that 200MA area at $465 with an expectation of $800+ later in the year. You would swing trade this from that $465 level back to that $800 level with trailing stops to protect your profits.
The ideal scenario is to have price undercut the 200 Day MA and then move back up and close above the 200 MA. Closing above the 200 MA is key which is why we highlighted it twice here. If you close below you can easily tag $400 before $800+ is reached. An approach to this could be to buy 1/4 to 1/2 of your position in $TSLA to get a feel on price action. If you see the trade working then average up at $485 and $500 as bullish patterns develop. You often see set ups begin to form after downtrends have ended.
More to follow - until next time!
-J