ARW insider selling - A short opportunity?ARW has seen significant insider selling since 22 May. A closer look at the TA could potentially reveal a textbook short opportunity.
What is happening?
On the weekly we are able to draw a pitchfork, using the top and bottom of the Covid-crash in 2020. The median line is well respected by price.
Elliott-wise we see an extended wave 3. In that case, we add the length of wave 1 to wave 4 and can conclude that price has potentially made a top at $124 (the red box). The ending diagonal gives further confirmation that the trend may come to an end here.
Where do we go from here?
Price has already responded with an impulse to the downside, indicating selling pressure. A target can be the lower pitchfork line where we find confluence with the 200 EMA. Because we have identified the end of a larger EW pattern, we can assume a deeper correction that will break the current structure.
How to trade it?
Because price has previously bounced off the 8 EMA, we can use the next bounce to sell into the pullback, instead of chasing the short from here.
What if not?
If price reverses back above the daily candle, the idea is invalidated. This is a possibility especially if SPY/QQQ continue their uptrend due to inflation.
Happy trading!
