I try to keep life simple. I can use Chaikin oscillator, BB, Donchian channels. Gann angles, Gann time clustures, Fibs, A/D lines, bull/bear sentiments, esoteric weighed MA's, and a whole bunch of indicators. The more I try to use them, the more they confuse the heck out of me. When the market has crashed like this, they all go out of whack.
Or I can look at the simple price, volume and pattern. What we have here is a crash following disappointing earnings (which was profitable, thank you :)); followed by a low volume 3-day pullback. The resistance is well defined at 36, which was yesterday's high. The stock closed at 35.69 today. A short entry here or below today's low (35.55) with a 36 stop and a target of 33 provides you with a trade with 45 cents risk and about 2.50 or more reward. I see it as a pretty good risk/reward ratio. Anything below 33 will be a bonus.
I played AMZN on both long and short side last year - from about 20 up to 58 and then down some. I also swing traded it from 38 up for 5 points. Now it is time to ride the mountain down.
Out of zillions of setups like these I have seen, there are only a few that have gone the other way. I do not care what the indicators say. Risk/reward ratio justifies the trade.
Simple :) |
