Swing Trade Idea for AMDNASDAQ:AMD is currently forming a H&S pattern on the weekly chart. I think the price will continue to chop in the right shoulder range until earnings, at which point the price will begin its decent to the lower extremity of the weekly Zig Zag Channel ($140 range). In the meantime, I am watching the Value Area H&L levels shown on the Anchored Volume Delta Profile (red and blue horizontal lines) which provide good boundaries for short term swings.
As you can see from the Volume Profile , there is strong buying volume on the lower end that will require a significant catalyst to break. If the reaction to earnings is positive, the H&S pattern will be invalidated and I would expect to see the price rise back to the upper extremity of the weekly Zig Zag Channel .
My bias is bearish, which is supported by several indicators. The first one I’ll go over is the VPT/OBV (Volume Price Trend/On Balance Volume) indicator. This is a useful indicator that essentially measures the shares traded at non-equilibrium prices, and adds or subtracts them from the line. This can help suggest shifts in the underlying trend. I have modified the version posted by user BrandonMendez to use Heikin-Ashi input (for smoothing) and two moving averages (8 period RMA and 55 period SMA) to detect reversals. On the daily and half-day charts, the fast VPT_OBV moving averages have crossed below the slow average.
Another indicator I’m using for this thesis is the RMI Trend Sniper indicator by user TZack88. This overlay 5-period EMA line is weighted by RSI and MFI levels. Last week’s low bounced off the line on the Weekly chart, so that is an important level to watch (which also happens to be the Value Area Low).
Lastly, I like to look at PVI/NVI averages to determine which sides smart money and retail are on. On the daily chart, we can see the NVI line is moving towards zero, which suggests an imminent low-volume pop. On the half-day chart, however, we can see the PVI average is right at the zero line. Positive volume will likely come from news later in the week and could have a negative impact on the price of AMD.
I will only enter a short trade once the price hits the liquidity zone in the middle rectangle. If the price is moving up at tomorrow's opening, I will hold off until hitting the short entry target at $182.44. If the price is around Friday's close at open, I’ll be looking for a bounce at $167.36 to enter a long trade, with a take profit target at the Value Area High ($184.32).
Let me know what you think of this idea or if you have any questions.
