ETSY - STRONG DIAMOND REVERSAL PATTERN FORMING!! UP OR DOWN?Hey, Hi, Ho, whats up,
Seems to me like we have a pretty decent diamon pattern playing out here after a more than massive drop to the stock. I have found, and its also pretty well recognized that although rare, diamond patterns are extremely profitable if played correctly.
Not only can you flip short exp calls and puts as the up and down waves are pretty predictable - a long call strategy can give you a really great opportunity to accumulate contracts as the price action goes side to side as you wait for the conclusive breakout.
According to the chart the breakout projection is approx $200 which as I have charted it is a key level of resistance/support so that makes sense. Basically its a gap fill of sorts because the price fell HARD from 200 on.
On the flip side if the pattern fails and its just a continuation of the current down trend the price target is $80-$90 area - here's hoping it doenst go this way.
An importnat note for anyone playing options like myself, there is a significant lopsided amount of PUTS being held in open interest from now until Jan 2024 - obviously this can change however I think its pertinent to notate where it stands now.
Price action looks to be topping at this part of the diamond and should roll over down to about $125 by the end of March. IMHO either June 17 or 1/20/23 exp calls are going to be the most valuable
As of today I like:
6/17/22 ($175's and $240's)
1/20/23 ($230 CALLS)
However time will tell and I will revisit near the end of March or when my bottom alert gets triggered, which ever comes first.
NOT FINANCIAL ADVICE.
