ARIA has enjoyed a rally of 79% during the past three months. It's still bullish as the chart stands, but it's worth watching for a Bearish Wolfe Wave reversal. Comments are on the chart.
Also on the chart are comments from the Bearish Rising Wedge late last summer. There was a good "Body of Evidence" that ARIA would retest the bottom of that wedge.
This is an example of a Bearish Wolfe Wave in FCX last year. Strong upside directional Lead-In, then a DOUBLE Fakeout/Breakout at Wave 5, followed by...
... a close back inside the pattern...a break below the pattern...and, the Wave #6 target getting MADE and exceeded on the downside.
2 comments:
Melf,
I have a question on how you would play this as an intra-day trader. would you wait for a break of the upper trendline to go short, or would you wait to until it crossed below the lower trend line? On the flip side, if it goes back and tests the upper trendline, and shows strength, would you consider a buy at that point?
I also wanted to point out a setup in amzn. It appears that there was a bullish decling wedge from late October that broke out to the upside on the first of the year at around 175. The width of the wedge was about 40 points at it's highest, giving an upside target of 215. It also retested the breakout on the fifth. On the upside it tested an intermediate high around 148.8 yesterday and today, but closed lower. A move above 185 would also create a reverse H&S (if done soon, as the left shoulder is only 4 days). This would put an upside target around 205 based on the low around ~166 and the ~185 neckline. Let me know what you think of my analysis.
As always, thank you for your wisdom.
Good Morning, Kevin,
If ARIA broke down from a pattern in the intraday charts, yes, I would consider shorting it prior to the stock breaking the upper trendline of the possible Bearish Wolfe Wave, depending on how bearish the intraday pattern looked.
A close back below the upper trendline of the Wolfe Wave is a reasonable short play, but never any guarantees. They can be tricky. For example, look at the chart of FCX at the bottom of this post. On April 6, it broke out of the Bearish Wolfe Wave, closed below it, but then gapped up to a "higher high" on April 8, appearing to show strength, but then it closed that session below the Wolfe Wave again.
That one was a DOUBLE Fakeout/Breakout at Wave 5, putting a scare into the shorts on that April 8 Gap Up opening, but the Wave 6 target ended up getting MADE and exceeded on the downside.
Due to my own time constraints and my desire to work less, not more (LOL), I normally don't comment on stocks that others are following, but since I've been watching AMZN rather closely, I'll post on that one today.
Hope that you're 2012 is off to a good start, Kevin!
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