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EA Short Setup & Aggressive Entry

EA (Electronic Arts) will be added as an aggressive short entry here at the top of the wedge with a more conventional short entry or add-on to come on a break below both the rising wedge pattern AND the minor support level. T1 & T2 are the current targets with a suggested stop over 66.00.

What makes an entry at current levels aggressive is the fact that I am shorting EA while still well inside a potential bearish rising wedge pattern. This is aggressive because prices may continue to rise within the pattern or the symmetry of the pattern could dissipate if prices continue to rise & the negative divergences in place are taken out with both the MACD & RSI going on to make higher highs.

On the flip side, what makes this aggressive entry an objective entry is the fact that 1) prices are currently trading at the top of the wedge (i.e.- resistance) in addition to the fact that EA is also challenging major long-term resistance defined by the stock's all-time highs back in 2005-2007. Therefore, while this might not be an extremely high probability trade due to the fact that both EA & the broad market are both solidly entrenched in a primary uptrend/bull market, the R/R, should this trade play out as expected, is well above average.

My plan is to short 1/2 position here, adding a second lot if & only if prices break below the rising wedge pattern & minor support line. Whether or not I decide to extend the final target from T2 (51.25) down to either the potential T3 level on the daily chart OR the primary uptrend line on the weekly chart will depend on how both EA & the broad markets trade going forward.

EA daily May 11th

EA daily May 11th

 

In addition to the possibility of extending this trade to the potential 3rd target on the daily chart above (38.50ish area), EA also has the potential to morph into a multi-month swing short down to the primary (lower) uptrend line once the very steep minor (upper-most) uptrend line on this 10-year weekly chart gives way.

EA weekly May 11th

EA weekly May 11th

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May 11, 2015 10:36am|Categories: Completed Trades - Short|Tags: |Comments Off on EA Short Setup & Aggressive Entry