Retest after breakout | AMAT
Today we will take a look at AMAT. What are the main technical elements can we see here?
- First, we have the 200 days main structure that the price broke on November
- After the breakout, we observed a retest (typical behavior after a structure of this size are broken)
- Now, we are ready to define a level where I will consider that this chart configuration has upside potential towards the 2nd fibo extension or the higher trendline of the channel.
- IF the price makes a new ATH, I will consider that confirmation for the bullish view. Invalidation level will be below the retest
- IF everything goes as expected, I think we may see a movement with a duration of 100 to 150 days towards the target.
What are the odds of this view being right? I would say between 45% to 50%.
Are you trading this setup? No, I'm not trading this setup; currently, I'm exposed to the max amount of open positions my system allows me. However, I think this is a solid scenario from a technical perspective; the expected risk to reward ratio is about 2. As I mentioned before, the odds of this movement happening based on this type of formation are between 45% to 50%. (All you need to create an edge on the market)
What happens if the price never reaches the activation level and keeps falling? You simply cancel your view.
What happens if the prices reach the entry-level and then go straight to my stop loss? You simply absorb a stop. That's why it is essential to manage risk and define a % on each setup you will take; my risk management goes between 1% to 3%.
Thanks for reading! Feel free to share your chars and view them in the comments.
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