Cello's Big Move! Consolidation and Beyond!
One of the things you will hear about trading is how your patience is rewarded when you find a good set up. But sometimes you get rewarded without having to be patient at all. This case seems to be the latter. A quick review of the set up and break out and we will then discuss what has happened since the breakout and what we can expect next.
The Set Up:
On 2/6 we discussed the strongly developed ascending triangle that Cello's chart was showing us. This is a bullish pattern was met with increased volume leading us to believe a breakout was imminent. We noted the strong trend line support as an excellent entry point for the trade as well as giving us a natural location to place a stop if Cello failed to breakout. Sure enough we had two entry opportunities to take advantage of.
By 2/9 we were back looking at the buyers eating through the supply at $3.50 and waiting for the upside push or the breakdown of the trend line below it. By the afternoon Cello had pushed through the supply and kept moving up breaking $5.00 and finally reaching a high of $5.6453.
There plenty of places to take some risk off during the climb. This is important to capture some profits on a strong upside move in case it ends up breaking down when sellers being to enter the market.
From the two entries provided from the 2/6 Idea post to the highs of the breakout returns were 70% and 80% respectively. Not Bad!
The Aftermath:
I am using a 30 minute chart to show some lower time frame structure that will help illustrate the price discovery that is occurring in the new trading range post break out.
After we reached highs we moved into a neutral triangle pattern as we pushed price both up and down figuring out where the strong supply and demand zones were. Late on 2/10 we see the breakdown of the triangle and strong demand step in at $4.35 - $4.40. This is a high lower than the base of the impulse up to the new highs which is a bullish trending sign. We spent the next 24 hours in an upward channel heading towards the top of our range at $5.00. This consolidation between $4.35 - $5.00 will help set the base for the next move.
What's Next:
Consolidation is price action that neither continues or reverse the trend. So until we see a volume increase at the top or bottom of the range I would expect to see price bounce between the edges.
How to Trade:
A simple trade is going to be buying at $4.35-$4.40 and/or selling at $5.00. Stops would be located below or above these supply and demand areas.
In order for a breakout or breakdown to occur we will need a significant volume increase. Note how low volume is compared to the high volume that was needed to move price through previous supply areas.
Wrapping it Up:
One of the most important things you can do as a trader is examine both what went right and wrong for your trades. Cello did what we expected it to do resulting in a significant price move and potentially some nice profits if you took risk off during its move up.
There are still opportunities to enter the stock if you would like to get long. I will update on this post as long as we are consolidating. If a new trend starts to emerge I will let you all know. Thank you for the great feedback, likes and follows!
The Set Up:
On 2/6 we discussed the strongly developed ascending triangle that Cello's chart was showing us. This is a bullish pattern was met with increased volume leading us to believe a breakout was imminent. We noted the strong trend line support as an excellent entry point for the trade as well as giving us a natural location to place a stop if Cello failed to breakout. Sure enough we had two entry opportunities to take advantage of.
By 2/9 we were back looking at the buyers eating through the supply at $3.50 and waiting for the upside push or the breakdown of the trend line below it. By the afternoon Cello had pushed through the supply and kept moving up breaking $5.00 and finally reaching a high of $5.6453.
There plenty of places to take some risk off during the climb. This is important to capture some profits on a strong upside move in case it ends up breaking down when sellers being to enter the market.
From the two entries provided from the 2/6 Idea post to the highs of the breakout returns were 70% and 80% respectively. Not Bad!
The Aftermath:
I am using a 30 minute chart to show some lower time frame structure that will help illustrate the price discovery that is occurring in the new trading range post break out.
After we reached highs we moved into a neutral triangle pattern as we pushed price both up and down figuring out where the strong supply and demand zones were. Late on 2/10 we see the breakdown of the triangle and strong demand step in at $4.35 - $4.40. This is a high lower than the base of the impulse up to the new highs which is a bullish trending sign. We spent the next 24 hours in an upward channel heading towards the top of our range at $5.00. This consolidation between $4.35 - $5.00 will help set the base for the next move.
What's Next:
Consolidation is price action that neither continues or reverse the trend. So until we see a volume increase at the top or bottom of the range I would expect to see price bounce between the edges.
How to Trade:
A simple trade is going to be buying at $4.35-$4.40 and/or selling at $5.00. Stops would be located below or above these supply and demand areas.
In order for a breakout or breakdown to occur we will need a significant volume increase. Note how low volume is compared to the high volume that was needed to move price through previous supply areas.
Wrapping it Up:
One of the most important things you can do as a trader is examine both what went right and wrong for your trades. Cello did what we expected it to do resulting in a significant price move and potentially some nice profits if you took risk off during its move up.
There are still opportunities to enter the stock if you would like to get long. I will update on this post as long as we are consolidating. If a new trend starts to emerge I will let you all know. Thank you for the great feedback, likes and follows!
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