The best trade setups occur when many different factors align simultaneously. Case in point the IBB (Biotech iShares) chart today:
Here are the factors which lined up simultaneously today:
- ‘Oversold’ (RSI-14 below 30)
- Down 7 consecutive days
- Below lower 3-standard deviation Bollinger Band
- On track for more than 4x average daily trading volume (indicative of capitulation selling)
- Achieved measured move target from head & shoulders top pattern ($290)
- Testing previous support zone ($285-$290)
We took a long in IBB at $285.86 using a $278.79 stop-loss. The trade entry was shared in real time in the CEO Chat Trading Room where we will continue to update readers as the trade evolves. Come join the conversation at CHAT.CEO.CA!!
The time frame on this trade is 1-3 days. This is not a long term investment.
UPDATE (9/29/2015 10:20am): We exited this trade about 30 minutes after the market open this morning for a 3.83% profit.