ADXS one of the biotech stock had a great run as you can see on the daily chart. The stock came all the way from 7.70 to a high of 13,53 in short time, making it a candidate for parabolic short setup.
The stock finally cracked almost 13% and we had a great trade in our chat room shorting.
I will go over our reason for shorting it today and the setup that was presented to us.
We teach our students to check out stocks in various time frame before taking on a trade. On a 30 minute chart you can see that the stock had a nice uptrend going for last 4 days and on the “daily” time frame the stock was getting extended. As a short term trader we need to pin point an entry zone. Since daily chart was extended we need look for clues in shorter time frame, whether its is 30 minute on intraday 5 minute chart.
Once the stock breaks 4 day uptrend on 30 minute time frame ,it became vulnerable for more downside. Now that we have conformation of weakness from 30 minute Let us look at a intraday 5 minute chart to explain various ways you could have traded this stock and where to find ideal entry based on confirmation from 30 minute chart.
The first entry would have been 2 day uptrend break and green to red short setup but if you were not fast enough , it was a miss.
Ideal entry came when stock finally broke the 4 day uptrend line from 30 minute chart and when failed to reclaim back that uptrend. This is where the money setup ! We have confirmation on shorter term intraday then we have more confirmation from intermediate term 30 minute chart, make it a high probability short setup.
As can see the stock faded all day and closing almost at the low for the day.
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