This past Friday turned out to be a great trading day for me as I was able to capitalize on an A+ setup in Facebook (FB) first thing in the morning and then on the SPY later in the afternoon when news hit on the reopening of the email case involving Hillary Clinton. Today we'll focus on the Facebook setup and how I utilized the premarket levels for a very nice long trade where we were able to capture over a point in profit with less than twenty cents of downside. If you're interested in checking out more information on our trading strategies you can check out this link here or if you would like more information on our chat room services you can click on this link.
Above is a two minute chart of Facebook that I used to make my trade on FB and as you can see prices were stuck in a pre-market range between $130.65 and $130.00. When the market opened shares sold off into the support of that range at $130.00 and held the bid before reversing and breaking through the topside of the range on strong buy volume. Once it was outside that range I looked for prices to pullback into the previous resistance level and for it to act as support which it did perfectly. This is where I took my long position at the green arrow after confirming price action with the tape and got filled at $130.69 with a stop placement just below $130.50. As you can see prices accelerated and I was able to trim some profit off at my 2:1 profit ratio and then I brought my stop up to break-even. Some traders will wait a bit longer before moving stops up but I have found it has worked out better in my own trading to move it up after my first profit target.
Prices accelerated to the upside where I took most of my position off on the big candle that pushed through $131.80 where I got just over a point in profit on my remaining shares. I did leave some profit on the table with prices running up to highs of $132.97 but you're never going to guess the top and bottom of every move so I was still happy with my trade and how I managed it.
Pre and post market price data tends to play an important role in the price action during normal trading hours so it's important to make sure you are marking those levels off and paying attention to them. This is a prime example of why I utilize these levels along with floor pivots marked by the blue lines and why you should be paying attention to them too. This was an A+ setup in my book and will take this trade every time.
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