The breakout has not happened yet on MELI. This is our plan.
Let's take a look at MELI. We can see two relevant aspects on the chart.
a) The price has broken an ascending trendline that has been working since MAY 2020
b) The price has been correcting for the last 4 months almost, and the main structure we can observe is a descending Wedge.
Based on those two items on the daily chart, this is our trading plan.
-We can see a clear resistance zone at 1600 - 1650 that has been tested 3 times. Therefore we don't want to take any setup below that level. So, we will wait for the price to reach it first. IF that happens and we see a move above that level, we want to observe a clear corrective pattern. Here we have defined an ABC structure (what we are looking for is something with similar proportions as the previous corrective structure that happened at the same level we are waiting for this one.
-If all the scenarios are aligned, we plan to take a setup, as you can see on the chart. The two levels above the resistance are the broken ascending trendline (working as a dynamic resistance) and the previous ATH. We think that a setup like this one can provide us with a 1.7 risk-reward ratio and a resolution between 10 to 20 days.
Quick Questions
And what if this never happens? - We don't trade, darling
Ok, smart guy, and what if you wait for all this and suddenly you have a stop loss? - We just take it with 1% of our account with a smile on our faces. Stop losses are a fixed cost of trading; start dealing with that instead of avoiding it.
Why don't you buy it right now? - Because Momentum trading / Swing trading is about waiting for confirmations and creating scenarios with a good risk-reward ratio (which means defining stop levels) so after 40 setups, you can have an edge (or a statistical advantage)
Thanks for reading, guys! all your questions and ideas are more than welcome in the comment box! Have a great week.
a) The price has broken an ascending trendline that has been working since MAY 2020
b) The price has been correcting for the last 4 months almost, and the main structure we can observe is a descending Wedge.
Based on those two items on the daily chart, this is our trading plan.
-We can see a clear resistance zone at 1600 - 1650 that has been tested 3 times. Therefore we don't want to take any setup below that level. So, we will wait for the price to reach it first. IF that happens and we see a move above that level, we want to observe a clear corrective pattern. Here we have defined an ABC structure (what we are looking for is something with similar proportions as the previous corrective structure that happened at the same level we are waiting for this one.
-If all the scenarios are aligned, we plan to take a setup, as you can see on the chart. The two levels above the resistance are the broken ascending trendline (working as a dynamic resistance) and the previous ATH. We think that a setup like this one can provide us with a 1.7 risk-reward ratio and a resolution between 10 to 20 days.
Quick Questions
And what if this never happens? - We don't trade, darling
Ok, smart guy, and what if you wait for all this and suddenly you have a stop loss? - We just take it with 1% of our account with a smile on our faces. Stop losses are a fixed cost of trading; start dealing with that instead of avoiding it.
Why don't you buy it right now? - Because Momentum trading / Swing trading is about waiting for confirmations and creating scenarios with a good risk-reward ratio (which means defining stop levels) so after 40 setups, you can have an edge (or a statistical advantage)
Thanks for reading, guys! all your questions and ideas are more than welcome in the comment box! Have a great week.