FIND THE RANGE & GET EARLY ON THE TRENDThis particular breakdown I'll use Kroger to show how profitable you can become by getting in on "Range Position Plays".
When prices create a lot of two sided trading for an extended period of time like Kroger did from Feb-May.
Traders should start to identify when the range is beginning to weaken.
Kroger traded in a range for 3 months before finally breaking down from its range. If you simply played the breakdown of the range, you could have taken a 3 day decline on Kroger. Puts would have paid nicely. A simple entry below 53 and you could have rode Kroger down to 47. A nice 6 point drop for an asset such as Kroger.
If you decided to trade the 3 month range Kroger was in, then you would have entered this trade for a short around April 11-12th.
As price broke below $60, Kroger then entered back inside of its range. Once that happened. You then would identify your support areas and play the downside accordingly.
Kroger printed 3 bear legs down from 60 all the the way to 47. It took roughly a month for Kroger to move 13 points, but if you were on the right side of it. That 13 points would have been major.
There was a chance to grab anything from 58 puts to 47 puts and they all would have worked out.
If purely speaking on retracements, then you could have expected Kroger to potentially Pullback to around 50 after it broke its range. The 50 level is considered a 50% retracement and a GAP also was there as well. Price actually sliced through on its 3rd Bear Leg and retraced over 75% back to the 47 level.
There were 3 different swing entries on KROGER: Below 60. Below 57.50 & below 53.
In the end, it was a beautiful short position to get in on. From 60 to 47.
Learn to spot two-sided trading A.K.A Range Trading. Once that range breaks, a trend may then form afterwards. This is one of the best ways to "Get Early" on a Downtrend.
