Using Trend Indicators to Help Determine a Short in TSLATSLA is having quite a bit of news these days. There are plenty of traders who will use that for fuel to look long or short. However, that's not what I want to do. I want to let the chart tell me what to do. As I'm not using my actual trading platform, a few things will have to be "givens". Feel free to look these up for yourself.
This is how to trade using a plan for the entire process start to finish before you enter. If you do not have a trading plan, do not take this setup. This is for educational purposes only. Trading involves risk and you may lose actual capital by taking this trade if it does not work. You must trade your own plan. I simply wanted to show you what that can look like for a specific trade.
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Using two price channels, the shorter mid line has crossed below the longer midline on both the daily and weekly. What this means is that daily and weekly price action is geared towards the downside. This has failed before, but this is not the reason to short, simply a confirmation piece that the short is valid.
Using the 60 minute, a high probability short is presenting itself. Not shown: MACD & 200 simple moving average.
Shown: 50 simple moving average, ichimoku cloud (cloud only, nothing extra to keep confusion down as much as possible) and 20 range price channels.
TSLA is closing below the 20 range low, under the 50sma, and below the cloud. The 200sma (not shown) is above the 50sma which shows bearish strength from a moving average perspective. The MACD (not shown) and MACD Avg are both below zero showing short side strength.
Setup 1: Short when the 60 minute closes below the 20 range low. (Triggered Just now on close at $282.65)
Setup 2: Short when the 60 minute closes below the previous pivot low at $282.51. (Not Yet Triggered)
Initial stop (aggressive) above today's high which is $291.62 using whatever cushion your plan suggests.
Initial stop (conservative) using the 20 range high. Exit if the 60 minute closes past the 20 range high or move your stop just above the bar that closes above the 20 range high.
Profit target: $250
Trailing Method: Once the 20 range high gets below your entry price, walk the 20 range high. If price closes past the 20 range high after it gets under your entry price, exit immediately or move the stop just above that bar's high.
Do not move the stop until the 20 range high gets below your entry price. Accept the full risk going in. You reduce risk when it's not working, not when it is not working and you really didn't want to lose what you put out there.
If target reached, take all off or 1/2 off and walk the 20 range high for the rest.
Earnings for TSLA are May 2nd, you have plenty of time to exit before earnings. Do not hold thru earnings unless your plan allows. Earnings have substantial moves and a 60 minute chart is not where you want to be trading earnings from.
This is a high probability trade but that does not guarantee it will work. Trading is not about guarantees, it's about trading consistency to produce an edge over the long haul. This is how every trade you take should look:
Reason to take the trade
Where to get in
Where to put the stop
Where to get out (Notice trailing it is an option, it doesn't have to be 1:1 or anything like that)
When to reduce risk & trail
Known news events that could disrupt your trade & what to do about it
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