Hi Bella,
I have been learning a ton from One Good Trade, The Playbook, and all the online educational content you have. Thank you!
When you are analyzing a stock “in Play” and looking at previous support/resistance levels, how much weight do you give them going forward with that days trading? After all, we would be trading this stock in play BECAUSE it is acting unusual, which might make those prior levels less meaningful on this day.
How should I think about this when analyzing a stock in play?
Thanks so much for being one of the TRUE educators in this space!
Best,
Ben
@MikeBellafiore
Whenever we make a trade decision we consider:
- Big Picture
- News Catalyst
- Technicals
- Reading the Tape
- Intuition (*for experienced traders)
Let’s break down variable #3- technicals. We consider the intraday technicals AND the long term technicals, when make a trade decision. Yes! we look for levels intraday when trading a Stock In Play. But also Yes! we consider previous support and resistance levels when making a trade decision.
Let’s use $DIS for a simple trade today, as an example.
DIS was In Play:
THUMBS UP: A strong opening weekend for its film “Finding Dory” sent Disney higher.
The Pixar sequel grossed $136 million in North American theaters.
That was more than analysts expected and the most for an animated movie.
Disney stock climbed $1.52, or 1.5 percent, to $100.52.
It opened and spiked to 100.80ish intraday, as you can see from the intraday chart below:
If we look at longer term support and resistance levels, we will notice resistance at 100.80.
I noticed resistance on the Tape at 100.81, an unsustainable spike pattern intraday, and DIS at longer term resistance on our charts, so I placed a small short.
The trade: short DIS Tier 1 with a stop above 101 for a move down to 100.
Yes! we consider longer term support and resistance levels when we trade Stocks In Play.
Thank you for the question. As always, I hope that helped.
*no relevant positions
