TWTR Symmetrical Triangle Break Weekly Options Play
Updated
Description
TWTR has broken out of a Symmetrical Triangle consolidation pattern following the previous breakout of the large broadening pattern circled in yellow and breaking down its major trendline (3pt up-slanting blue line).
Symmetrical Triangles are a congestion pattern representing indecision and typically forming in an already established trend before a further move in the direction that preceded the pattern.
Here we see a large spike in volume at the beginning of the pattern, followed by descending volume throughout, and eventually the large spike in volume on the breakout, beyond the safe 3% margin, on 4JAN making a textbook "coil".
An additional technical indicator is the MACD convergence.
The resulting price move implied by the pattern is equal to price move that preceded the pattern.
Here I am using the long candles on 10NOV following the breakout of the broadening pattern as the starting point, giving a pattern-implied price move down to ~32.
Our price target will be more conservative @ 34 due to the expiration of the position.
Using a Long Put to remain long volatility and short stock.
Long Put
Levels on Chart
SL is a daily close back in the triangle
PT : 34
*Stops based off underlying stock price, not mark to market loss
The Trade
BUY
2/4 40P
R/R & Breakevens vary on fill.
Manage Risk
Only invest what you are willing to lose
TWTR has broken out of a Symmetrical Triangle consolidation pattern following the previous breakout of the large broadening pattern circled in yellow and breaking down its major trendline (3pt up-slanting blue line).
Symmetrical Triangles are a congestion pattern representing indecision and typically forming in an already established trend before a further move in the direction that preceded the pattern.
Here we see a large spike in volume at the beginning of the pattern, followed by descending volume throughout, and eventually the large spike in volume on the breakout, beyond the safe 3% margin, on 4JAN making a textbook "coil".
An additional technical indicator is the MACD convergence.
The resulting price move implied by the pattern is equal to price move that preceded the pattern.
Here I am using the long candles on 10NOV following the breakout of the broadening pattern as the starting point, giving a pattern-implied price move down to ~32.
Our price target will be more conservative @ 34 due to the expiration of the position.
Using a Long Put to remain long volatility and short stock.
Long Put
Levels on Chart
SL is a daily close back in the triangle
PT : 34
*Stops based off underlying stock price, not mark to market loss
The Trade
BUY
2/4 40P
R/R & Breakevens vary on fill.
Manage Risk
Only invest what you are willing to lose
Trade active
Missed entry yesterday, Entry times are prior to 10:30 or between 1pm & 2pm depending on price action.
Trade active
Filled @ 1.75.Trade active
Averaged down, new AVG fill @ 1.51.Trade active
Cut 3/4 of position @ 2.63, +74%.Trade active
Added 1/14 39P @ .65 at 12:10pm.Trade active
Closed 1/14 39P @ .56, -14%.Trade closed manually
Filled last portion @ 2.8, +85%.Target not reached, I am closing here because I am focused on the week, not the month.
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