Patterns within a stock can help you optimize your entries by gifting you a precise high probability entry point that has dual functions. First, the likelihood of a successful trade increases the more the pattern has proved itself reliable. Second, and most important, the pattern gives you the structure for a defined low risk entry.
The Remount Setup
One of these high probability patterns is playing out right now in Apple.
Let’s take a look at how Apple has reacted recently to both it’s 50 and 200 day moving averages by studying this chart:
The red line is the 50 day moving average and the blue line is the 200 day moving average. Notice the green arrows on the chart. Each time Apple has “violated” this levels by price breaking below the moving average, and eventually “remounted” or closed above those levels, it lead to a quick retest of highs.
Each of these entires lead to a winning trade low risk and high reward trade if you entered on the remount of the moving average.
Apple Entry Plan
Apple might be setting up for another remount entry. Here’s the video analysis of the setup plan. Notice the focus on precise entry points and risk analysis.
Two days ago the stock closed below the 200 day moving average and is now getting close to remounting that level. A close above $193.75 triggers a remount. This entry offers great Reward on Risk because we can set a stop below today’s low at $188 and set a reward target at $215, which is near the 50 day moving a average.
We are risking 6 dollars to make 19 dollars, which amounts to 3:1 reward to risk. So in other words, if you buy 100 shares of Apple you are risking $600 to make $1900.
That’s a money setup!
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