0HEM trade ideas
1D SMITH WESSON TRENDLINE BREAKOUTTrend Line Trading: The Trend Breaker Strategy
This trendline breakout trading strategy uses three indicators, which are the following:
MACD- The inputs for this indicator are: Fast Length= 12 (represents the previous 12 bars of the faster moving average), Slow Length= 26 (Represents the previous 26 bars of the slower moving average), and Signal Smoothing= 9 ( represents the previous 9 bars of the difference between the two moving averages. This is plotted by vertical lines called a histogram).
Simple Moving Average- The inputs for this indicator are: Length 8, Offset 0. (Red line)
Exponential Moving Average-The inputs for this indicator are: Length 20, Offset 0. (Blue line)
This Trend Breaker strategy also uses three different time frames. They are the 4 hour, the 1 hour, and 15 minute time frames. This top-down approach uses these time frames to identify a trend, find a breakout point, determine an entry point, and execute the trade.
Step One to trend line trading: Identify a trend
The first thing you need to do is identify an upward, downward, or sideways trend by switching to a 4-hour and 1 hour time frames. The reason both are used is that it will give you the best perspective in determining a trend according to this strategy. Draw a trend-line so that 3 points of resistance or support was touched. We created this trendline trading system so that you could easily enter trades without a lot of guesswork on your part. Here You can see a funny video about trading levels.
Since this strategy focuses on trends, a trend line will be drawn on the support or resistance lines of the trend. The criteria for a trend is that there needs to be at least three points of resistance or support.
As you can see on the 4- hour time frame this clearly is a downtrend.
Below is the same chart only this is a 1-hour time frame. This is just to get another perspective of this downtrend. It is good to do this to completely confirm this trend by identifying 3 levels of resistance. Trading with trend lines is not easy, that is why it is important to have a clear system of step by step rules to make it easy for you to follow.
Step Two: Identify a Breakout point Trendline Trading System
In order to find a breakout point of the trend that was identified in step one, the strategy will use a combination of the three indicators (MACD, 15 minute SMA, EMA) to identify a break out on the 15-minute time frame. This time frame is used because a trend was already identified in step one on the 4 hours and 1 hour time frames.
As you can see in the chart above on the 15-minute time frame, the MACD lines were crossed. When the crossover of the fast length and slow length occurs, this will signal a new trend. This gave an indication that a trend was breaking. The moving average and exponential moving average lines also crossed. So when the MACD lines cross and the simple moving average/ exponential lines cross wait until the candlesticks go above/below trend line that was drawn in step one, then identify a point of entry into the trade. One of the reasons we like trend line trading so much is that it is straight forward and simple and we recommend all traders have something simple.
So looking at our example above the criteria was met to go to step three because the SMA and EMA crossed and the MACD lines crossed. Also, the trend went upwards and hit our trend line. This is a signal to go to step three.
If neither of the indicators crosses before the candlesticks close and hit the trend line then do not go any further because the trade does not meet the criteria of the rules. The indicators need to show that the trend broke before it touched the trend line.
Note* When our indicators are crossing, the trend needs to be heading toward the trend line that was drawn in step one. This is because the trend is breaking and a breakout is about to occur. When the breakout happens we will discuss when to make an entry.
Step Three: Trend Line Trading Identify a point of entry
Here is a list of the entry criteria:
These 4 things must happen to enter a trade with this Trend Breaker Strategy.
Simple Moving Average Must Cross below the Exponential moving average.
Macd Must Cross
The price must break below or above the trend line.
After the break of the trendline, you must wait for 3 candles to close on the 15-minute chart before taking your entry.
Now we need to identify a point of entry. To identify a point of entry always use the 15 minute time frame in this strategy.
So in our example below, we see that there is an obvious stand-off between buyers and sellers on the trend line.
Once there are at least three candlesticks above or below the trend line, you execute the trade.
In this example, there are three candlesticks that fell above the trend line after our indicators signaled that the trend was broken. At this point, you want to make an entry. Also, read about Trader's Tech and Installing MT4 EAs with Indicators.
Step four: How to Trade with Trend Lines: Determine where to place a stop loss. 1 Use Pong Position Icon on left side toolbar. Adjust Top Prifit line until center text says 1 to 3 risk reward. This will show you where SL should be placed. OR
Place a stop loss past the last support and resistance levels in the trend itself. Again, use the 15 minute time frame to find this point of resistance/ support level.
In the example shown below, place the stop loss below the last support level. This will ensure that if there was a bearish move, it will hit the last point of support and make a bullish move upwards.
You can clearly see that there are two levels of support in the above example. Use the support levels to determine the stop loss. The rules were to place the stop loss below the last support level which is why you see the stop loss below these levels.
Step five: Trendline Trading System Exit Strategy
The plan clearly identified a trend, a breakout point, point of entry, and determined a stop loss. The final step is to determine the exit point. This Trend Breaker strategy uses 1 risk to 3 reward ratio.
What that means is you have the potential to make 3 times more than you are risking.
Use the Long Position Icon on the left side toolbar. Adjust top profit level until the center text says 1 to 3 risk reward.
Conclusion
This Trend Breaker Strategy is simple and yet effective. There is no need to stress and worry that you made the wrong trade. You follow the rules and do not let anything else make you back out of a trade. If it follows the rules, execute the trade with confidence.
Always remember to only be risking no more than 2% of your account!
This will help you identify daily trends and points where they break. There is no need to force yourself into a trade. If it does not follow your rules and guidelines then search for another pair to trade. Feel free to check out one of our other trading strategies.
sold out everywhere....well this is consolidating nice along moving avg. perfect pullback to enter at high of day next week. though i feel it is a good swing trade rather then momo but can prob. go either way. election Biden win gonna explode trump win civil unrest = Guns and ammo..... Bought long calls into may and might trade
SWBI massive W with upside targets shown on chart99% of my portfolio is in on this one, call me biased. The real fun would be had in writing calls...
SWBI on watchI'm not sure this is a good thing, but this gun maker looks like it wants to breakout.
Long above the box to dotted line targets. Was moving in the opposite direction of the market today.
I will not enter unless price clears the top of the box on volume. Trade is dead with a close below the box.
SWBItrading off the 10 & 20 EMAs, the daily is about to confirm the retest and signal an uptrend on the daily (green candle closing above the EMA cloud with the 10 over the 20) which could easily invalidate the idea published here: breaking down the right side of the blue "M".
If the "M" does play our as depicted, it will simply paint a larger "W" with an upside around $20, the resistance from our most recent major high.
SWBI Break Out and FundamentalsWe can see a Sym triangle and a possible HnS forming. Gun sales at an all time high. Good time to buy and hold and for options I would wait for neckline break to confirm entry.
Election Play - Buy Smith & WessonWith the election coming up, it is hard to imagine any other scenario besides a blowout. Regardless of your own political beliefs, Democrats are outnumbering Republicans in early voting which is objectively a huge advantage. Democrats seem to be motivated on removing Trump, and it is showing with the surge in voter registrations and early votes cast.
With that being said, Smith & Wesson's financials are solid and are benefiting from the pandemic's increase in gun sales. Not only that, based on The Economist's Election Model , Democrats are favorites in winning a majority in the Senate and the presidency. This will cause gun sales to go up even more. The stock is already about fair value, and it is hard to imagine not going up from here.
Long.
SWBI SHORT TERMHolding the current trend on the 15 min chart, moving higher in the channel. Possible that the election cycle has more people hoping for a 2016 repeat in SWBI.
BE CAREFUL, Could very easily crumble back to $15.00 by the end of November for a retest of the 10&20 EMA from the daily chart, if the election cycle doesn't push the demand higher.
SWBI 15min Chartshould move back to the bottom side of the channel in the short term, allowing for the next leg up in the long term.
$SWBI Not Carrying a Gun into earnings
SWBI has risen 400% from the March lows, is that warranted?
It looks like in recent weeks considerable register ringing has taken place, so maybe
the risk is to the downside going into earnings.
The stock has lost the 20ma as support
ALL technical indicators are bearish.
Previous selloffs have all happened in August,
2007 & 2016 almost to the exact day.
PLEASE DROP A LIKE BELOW.
SWBI:NASDAQ - SMITH AND WESSON BRANDS - Up 250%With gun sales in the US going through the roof, it shouldn't be any surprise that Smith and Wesson has been doing particularly well. Big volume yesterday and the RSI shows there is probably still value in it. Could be worth a watch.
(a 16% trail would keep you in most of the trade if you wanted to run a tighter stop).
McMillan Volatility Band Sell Signal in Smith & Wesson $SWBIConfirmed MVB sell signal in Swith & Wesson. Daily Strategist subscribers entered this position with us at 21.65 using Sep 22.5 puts. Initial stop set at 24.00. You can find out more about this indicator, as well as following us on trades like this one, by using the links in our signature below.
Short short on the Gun Makers SWBI and RGRNASDAQ:SWBI NYSE:RGR
Watch for the circled area for the rebound or continued downtrend. Gun makers SWBI and RGR with copy paste stock performance.
