Lululemon (LULU) moves off Trendline Support and Breaks Higher
LULU has been rising in a trend channel since April. The price recently pulled back to channel support and then consolidated there. On Oct 10 the price broke above the consolidation signaling a long entry.
The chart shows two trade scenarios. One is entering when the price breaks above the consolidation. This trade has a 6:1 reward to risk based on the estimated exit (top of channel). Spotting the channel and the consolidation would have alerted a trader to be on the lookout for an upside breakout. I posted this on Oct 9 in my free Facebook swing trading group (facebook.com/groups/528129224671978/). An order could have been placed to enter when the price broke above the consolidation high.
The other scenario is a late entry near the closing price on Oct 10. Still a good trade potentially, but the reward:risk drops to about 3:1.
The chart shows two trade scenarios. One is entering when the price breaks above the consolidation. This trade has a 6:1 reward to risk based on the estimated exit (top of channel). Spotting the channel and the consolidation would have alerted a trader to be on the lookout for an upside breakout. I posted this on Oct 9 in my free Facebook swing trading group (facebook.com/groups/528129224671978/). An order could have been placed to enter when the price broke above the consolidation high.
The other scenario is a late entry near the closing price on Oct 10. Still a good trade potentially, but the reward:risk drops to about 3:1.
Cory Mitchell, CMT
Stock and forex trading insights at tradethatswing.com/
Stock and forex trading insights at tradethatswing.com/
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