$CVNA flagNYSE:CVNA huge flag forming. Look for recent double top break (green line) for long. Markets have to favor (already ran so much this week), so have to be little cautious on that note.
CVNA trade ideas
CVNA squeeze incomingI dont think Carvana is tapped out yet. Could see a big move up towards $300 before it crash lands.
What Is a Parabolic Arc Pattern, and How Can You Trade It?What Is a Parabolic Arc Pattern, and How Can You Trade It?
The parabolic arc pattern is a significant formation in technical analysis, showcasing rapid, exponential price movements that signal significant bullish momentum followed by sharp reversals. This article delves into identifying, trading, and managing the risks associated with parabolic arcs.
Understanding the Parabolic Arc Pattern
The parabolic arc or parabolic curve is a technical chart pattern that signals a potential reversal. It is characterised by a steep, exponential rise in asset prices, followed by a sharp decline.
Characteristics of the Parabolic Arc Pattern
- Gradual Start: Initially, prices rise slowly and steadily.
- Acceleration Phase: The price movement becomes more rapid, often driven by increasing speculation and market excitement.
- Exhaustion Phase: Prices reach a peak where the upward momentum cannot be maintained, leading to a sharp downturn.
This pattern can be seen across various markets, including stocks, forex, cryptocurrencies*, and commodities. It often occurs during speculative bubbles when market sentiment becomes overly optimistic. The pattern's unique shape makes it identifiable, but it requires careful analysis to distinguish it from other formations.
The parabolic arc chart pattern has been observed in numerous historical market events. Notable examples include the dot-com bubble of the late 1990s and the Bitcoin surge in 2017. However, they can occur across all timeframes. If you find a parabolic curve on a low timeframe, it may look like a long bullish candle, typically closing near the highs, on a higher timeframe.
The parabolic arc trading pattern is unique in that, unlike the head and shoulders or double top patterns, which have more symmetrical and predictable formations, the parabolic arc is asymmetrical with a steeper rise and a sudden drop. This distinct shape can offer valuable insights into market psychology and potential future movements.
To identify your own parabolic arc chart patterns, head over to FXOpen’s free TickTrader platform to explore a wide range of markets and trading tools.
The Psychology Behind the Parabolic Arc Pattern
The parabolic arc pattern is heavily influenced by market psychology, primarily driven by two emotional extremes: greed and fear. In the initial stages of the pattern, optimism and speculation dominate, causing prices to rise rapidly. This is often fueled by Fear of Missing Out (FOMO), where traders rush to buy, believing the price will continue to soar indefinitely.
As prices climb steeply, the psychological effect intensifies, leading to more aggressive buying. This phase is characterised by euphoria, where rational analysis takes a back seat to the prevailing bullish sentiment. Investors and traders, seeing rapid gains, are convinced the rally is unbreakable, which propels prices even higher.
Along the way, some traders will begin to take potential returns while others will enter short positions. This creates pullbacks or ranges within the bullish trend, sometimes called ‘bases,’ that move in a stair-stepping fashion. Generally speaking, there are often three or four bases in a parabolic trend, though there can be fewer or more. The break in the uptrend often prompts a new wave of euphoric buying, leading to another surge higher.
However, this fast growth is unsustainable. Eventually, it reaches a tipping point where the exhaustion phase kicks in as early investors start to take potential returns, leading to a shift in sentiment. Fear sets in as prices begin to reverse sharply.
The same emotional drivers that fueled the ascent—greed and FOMO—now contribute to panic selling and rapid price declines. In the same way a positive feedback loop drives euphoric buying, this negative feedback loop can cause traders to scramble for the exit door and prompt a sharp reversal almost as steep or steeper as the initial ascent.
Identifying the Parabolic Arc Pattern
Identifying the parabolic arc pattern in trading involves recognising a distinct, exponentially rising price trajectory. This pattern typically follows a period of sideways accumulation, where prices move horizontally with minimal fluctuation. The transition from this phase to a parabolic rise marks the start of the pattern.
Key Characteristics
A curved line can be drawn connecting the successive higher lows of the price action. This line's slope increases at an almost exponential rate, visually representing the accelerating price movement. The steepening of this curve is a hallmark of the parabolic arc, indicating increasing buying momentum.
Volume Analysis
Volume can play a critical role in identifying and confirming the parabolic arc pattern. As prices begin their rapid ascent, trading volume often surges, reflecting heightened market interest and speculative buying. The constant increase in volume is crucial for validating the strength and sustainability of the pattern. A significant rise in volume during the parabolic phase suggests strong participation from traders, further driving prices upward.
Technical Indicators
The Parabolic SAR indicator is a valuable tool for identifying parabolic arc patterns. This indicator places dots above or below the price, signalling potential reversal points. During a parabolic rise, the Parabolic SAR dots will trail below the price, confirming the uptrend. While short-term corrections in the parabolic ascent will plot dots above the price, there will typically be fewer dots vs those below the price.
As the pattern approaches its peak and the price movement starts to decelerate, dots will also begin to appear above the price, indicating a potential correction. However, while there may have been only a few dots above the price during the parabolic movement, there will likely be a greater number of dots above the price as the trend begins to cool, as seen in the chart above.
It’s important to note that this can be a visual cue that the parabolic trend is ending, but the lagging nature of the Parabolic SAR indicator means that it comes with a significant delay. It’s best used as confirmation of a parabolic trend or reversal rather than a sole indicator of a parabolic ascent.
Trading the Parabolic Curve Chart Pattern
The parabolic curve chart pattern is a powerful yet risky formation. As buyers are in complete control, leading to a strong bullish trend, it’s unclear when the trend reverses as traditional momentum indicators like RSI can indicate overbought conditions, often giving false signals.
A parabolic curve trading strategy involves two main focal points: buying the uptrend and shorting the reversal.
Buying the Uptrend
Trading the uptrend of a parabolic arc can be highly rewarding, but it's also fraught with risk. The bullish trend is strong, and buyers dominate the market, making it challenging to determine an optimal entry point. Therefore, traders often use shorter timeframes. Typically, the risk-reward payoff might not be favourable as traders are effectively buying high with the aim of selling higher. According to the theory, it’s best to avoid entering trades when the ascent is near vertical due to the high probability of a sharp reversal.
This is a shorter timeframe of the Carvana stock.
Early Entry Points
Traders often look to get involved in the early stages of the parabolic arc, typically after a breakout from a sideways accumulation phase. During this phase, the price may follow a stair-stepping pattern, making it more probable the uptrend will continue.
Waiting for a Pullback
Another strategy involves waiting for a pullback in the strong trend. Traders might look for such signals as the price reaching a previous resistance point that now acts as support or the RSI on a lower timeframe showing oversold conditions. Setting a buy stop at the high of the pullback with a stop loss below the low allows traders to participate in the breakout and subsequent legs higher.
Taking Profits
Taking profits during a parabolic arc can be challenging. Traders could scale out, closing portions of their position at set intervals or risk-reward ratios. Another method is using significant resistance areas or round numbers as targets. Additionally, trailing a stop below the lows that form along the way can help in capturing gains while potentially protecting against a sudden reversal.
Shorting the Reversal
Shorting a parabolic arc requires waiting for clear signs that the trend is reversing. This approach can be more effective but also demands precision and patience.
Identifying Reversal Signals
Key signals for a trend reversal include the price beginning to move near-vertically before closing below the parabolic curve trendline. Other indicators are long bearish wicks, gaps down (mostly in the case of a parabolic stock pattern), and lower lows being created.
Monitoring market sentiment can also provide clues; for instance, Alternative.me’s crypto* fear and greed index and CNN's stock fear and greed index can indicate an impending reversal in these assets when they show extreme greed. However, a close outside the curve’s trendline is ultimately seen as the key signal.
Once traders suspect a reversal, they typically enter a short position with a market order, setting a stop loss above the recent high.
Taking Profits
According to theory, profit-taking strategies for short positions include targeting significant support areas that previously acted as resistance. Fibonacci retracement levels, typically the 0.382 to 0.786 levels, are commonly used for setting profit targets. Specifically, parabolic ascents usually precede a sharp reversal, meaning they often correct beyond 0.5 (i.e., a 50% correction), falling between 0.618 and 0.786. Similar to long positions, trailing the stop may help capture more of the downward move.
Challenges and Risks Associated with Parabolic Curve Trading
Trading parabolic curves comes with significant challenges and risks. The primary risk is the high probability of a sharp reversal, as the pattern's near-vertical ascent is unsustainable. This can lead to substantial losses if traders enter the market late or fail to manage their risk properly.
Volatility
Parabolic arcs are marked by extreme volatility. Rapid price increases can be followed by equally swift declines, making it difficult for traders to react timely. This volatility can lead to significant slippage, where orders are executed at prices different from those expected, especially if the catalyst is a notable news event.
False Signals
Indicators like the RSI, Stochastic, and MACD can signal overbought conditions prematurely. In a parabolic trend, these false signals can mislead traders into exiting positions too early or entering short trades too soon.
Psychological Factors
The intense fear of missing out (FOMO) can drive irrational buying, inflating the asset price to unsustainable levels. Conversely, panic selling during the reversal can exacerbate losses. Managing emotions and maintaining discipline is crucial but challenging during such volatile phases.
Risk Management
Effective risk management is essential but difficult to implement in real-time. Setting appropriate stop-loss orders and profit targets can be tricky due to the rapid price movements. However, it’s important to predetermine an exit strategy and stick to it.
The Bottom Line
Understanding and trading the parabolic arc can offer substantial opportunities, but this pattern also comes with significant risks. By recognising the pattern early and employing effective strategies, traders can potentially enhance their trading performance. For a reliable trading experience, consider opening an FXOpen account, where you can access advanced tools and resources to navigate the complexities of parabolic arc trading.
FAQs
What Is a Parabolic Arc Pattern in Trading?
A parabolic arc is a chart pattern characterised by a rapid, accelerating price movement that forms a parabolic shape on a chart. This pattern typically indicates strong bullish momentum followed by a sharp reversal. The steep ascent often results from speculative buying, driven by investor enthusiasm or fear of missing out (FOMO).
How to Trade Parabolic Arcs?
Trading parabolic arcs involves two main strategies: buying the uptrend early and shorting the reversal. Traders look for early signs of the pattern forming after a sideways accumulation phase and avoid entering when the ascent is near vertical. Shorting typically occurs when clear reversal signals appear, such as a break below the parabolic trendline or significant bearish indicators.
What Is a Parabolic Arc Stock Pattern?
A parabolic arc stock pattern is a specific formation observed in stock charts where the stock price rises steeply, forming a parabolic shape. This pattern often results from intense speculative buying and is followed by a dramatic price correction. It's common in high-momentum stocks and reflects significant shifts in market sentiment.
How to Use Parabolic SAR in Forex Trading?
The Parabolic SAR (Stop and Reverse) is used in forex trading to identify potential reversals in the market. It places dots above or below the price to signal the direction of the trend. Traders use it to set trailing stop-losses and identify entry or exit points during strong trends.
*At FXOpen UK, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules. They are not available for trading by Retail clients.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
30% correction, then more than 100% upsideThe whole analysis is based on Elliott Wave Analysis:
I believe that we have only just ended the Wave A of Wave (5), heading into a wave B, acting as a corrective move.
Idealy, I would like the price to dip into the 0.5 to 0.618 retracement zone (165-180).
This might take a while, but once this correction is over, I see a very strong move upwords, as a wave C of (5). This should take us to a new ATH anywhere between 400 and 515 (more precise predictions can be made as we approach the mid to end of the wave C).
I would probably wait till the correction is over to buy, 185-180 acting as a buying zone!
CVNA: Carvana’s Relentless Rally with No Signs of SlowingCarvana (CVNA) has been on an absolute tear, with no signs of slowing down.
Explosive Rally: CVNA recently shattered key resistance levels and is now pushing toward the ambitious target near $260—a near 100% potential gain from current levels if the momentum keeps driving upward.
Relentless Uptrend: Riding a sharp ascending trendline, CVNA is sticking close to its highs without much of a correction in sight. The SMA 150 is finally turning up, echoing the strength of the long-term trend shift.
Volume & Momentum: Volume’s been building up, fueling this rally. The RSI is riding high, yet this stock shows no interest in taking a breather. CVNA’s got that “all gas, no brakes” energy that keeps bulls excited.
Bottom Line: CVNA’s relentless uptrend and strong targets make this a chart that demands attention. With solid momentum, volume support, and fierce trend strength, Carvana looks like it’s got a lot more road ahead.
CVNA heads up at $209 then 219: Major hurdles to strong uptrend CVNA has been flying off the bottom 2 yrs ago.
Latest bull wave may be coming to end soon.
Earnings due soon, should make the decision.
$ 209.35 - 209.98 is the immediate resistance.
$ 219.04 - 222.96 is a major cluster of 3 fibs.
$ 233.74 - 234.60 is an overshoot target above.
$ 195.31 - 196.95 is the first (moderate) support
$ 180.87 - 182.38 is a better (stronger) support.
$ 171.58 - 173.68 is critical (strongest) support.
============================================
.
CVNA MOONSTER CVNA close target 210. Longterm 260 gap target. Unless missing a gap sooner than 260 but at some point soon then a massive reversal for all the east liquidity below.
CVNA WAY OVEREXTENDED - 618 fib level magnetism Way overextended, i think the 618 fib level is acting as a magnet, price wants to pull back from there, current valuation is outrageous.
SHORT 235!
Looks to continue to the upper bands length 215 before retrace The uptrend isn't parabolic, but another name for it, I guess. But we understand indicators can move along in time, and the retrace hasn't been favorable to bears. A stretch outside the Keltner and/or a touch at the second layer of resistance may be enough to bring this down more than a peg or two. It's to be seen, but for now, I'm bullish on continuation to the upside along the upper band, almost like distribution.
CVNA - +16% Short Play with 1:2CVNA looking overbought. I think this is due a retracement to the mean/retest of the trendline for a +16% trade.
The area corresponds with the 0.236 level on the fib retracement zones.
CVNA with a big breakout after earnings🔥opening above major trend/resistance zone I showed on the chart, I could see us going higher to 100-131 targets over the next few months 🎯
if you are active on the Carvana app you were not surprised by the recent earnings beat.. half the cars on my watchlist are gone within a few weeks! business is boomin! Up 29.3% on first-ever annual profit, mixed quarterly results.
boost and follow for more! thanks 💝
CVNA ShortIn the strong month bearish area.
It makes sense to follow after good enter point. The potential is 110.
Looks live a reversal might be in the works hereFrom the framework of the higher volume, maxed out indicators, within the red, before a breakout also possible before a flush, but do see a correction to run higher for now.
CVNA Crossover SwingNYSE:CVNA
Daily crossover triggered
Planning to buy at market open on 9/17 so long as we are above 148.85 (HOD on 9/3). Ideally, we stay above 152.33 (HOD on 8/30, last trading day of August)
What I'm buying:
With the way that CVNA tends to move, I'm opting for a vertical debit spread here.
Sep27 +155c/-165c for a debit of roughly 3.30, and a max gain of roughly 6.70 at expiration, which is also the max date of this trade.
Using an ATR of 7.77, targets are as follows:
SL: 141.62
TP: 177.35
Max Date: Market Open of Friday, 9/27
^^As always, whichever of these hits first
Additional levels:
159.85 - Recent Strong high
179.24 - This level is above our TP, but note this level when looking back on the weekly chart
A Swifter move to mid 170 could be ideal before next correctionThe trend is upward and isn't showing signs of slowing down. It has already made a new high and, with momentum, could add an additional 5-8% before retracing.
160 if the trend continues to go up after the correctionIn the channel, there is still room to go, but it has pretty much bottomed. We should see this back at 150 unless indices and ETFs are struggling.
Carvana - CVNA - What if the fed lowers interest rates?Carvana is about 200% away from recent all time highs. The expectation is that if interest rates are lower more people will feel comfortable buying cars. So it seems there plenty of upside expectations. Add Carvana to your watch list?
Carvana- Low Risk/High Reward EntryIt's a rare occasion when fundamentals and technicals align, and we might just have a compelling case here. Carvana stands out as one of the most heavily shorted stocks in the market. The company has been in the red for quite some time, and this quarter was no exception, with a loss of $1 per share, falling short of analysts' expectations on both EPS and revenue (they lost more than expected).
Despite these challenges, the company sees a shift in demand, with buyers increasingly returning to online car purchases. The Orange number 1 on chart marks the lowest price at the open on the gap-up day ( $66.48), a +26% jump from the previous night's close. The momentum didn't stop there; the price ran another 20% to hit a daily high of $76, before settling at $69.21.
Here's my strategy:
- Stop: Sell if the price drops below $66.48 (allow some leeway, given the volatility)
- Target: If it trades above $76, we could be looking at an elevator ride up to $150, mirroring its previous ride down from $150 to under $30 a share.
I'm eyeing a 1:2 quick trade risk/reward ratio, but that's a waste and the prospect of a potential short squeeze is tantalizing (yes, I said it!). Opportunities like this are few and far between.
Trade carefully,
OnlyTrade2Win.
Nasty bearish batPotential for long term bearish bat forming. But with the violently of cvna we could see this play out within a year or 2. Insiders have been dumping hard and headwinds are ahead for all automotive sales used and new. Confirmation will start if breaks below .382 fib on the montly. SL above .382. Good luck.
breakthrough 155 is significant If it breaks the last high, we have a very bullish sentiment; the chart screams for another flush, creating a much-needed correction and breathing room. However, this could be huge with current market conditions and the upcoming Jackson Hole meeting. If this doesn't break 155 convincingly, we see many key areas to support.
CVNA LongHere we go, CVNA just barely bumped up above it's 200w moving average, then reported today after hours and from what it appears, they've solidified this move above that barrier.
I'm looking to get in here with a caution against it closing 3D/Weekly underneath it again in the near future.
Carvana (CVNA) AnalysisCompany Overview:
Carvana, a leader in the online used car market, is transforming its business model following its acquisition of ADESA's U.S. physical auction business in 2022. This acquisition has positioned Carvana as the second-largest used car company in the U.S. and is driving a shift towards a more profitable marketplace model.
Key Highlights:
Strategic Acquisition: The acquisition of ADESA's auction business is expected to enhance Carvana's profitability by transitioning towards a marketplace model, which offers higher margins compared to its traditional retail operations.
Competitive Advantage: Carvana outperforms competitors like CarMax and AutoNation in terms of gross margin and profit per unit, bolstered by its strong online platform.
Cost Efficiency: The company has successfully reduced over $1.1 billion in annual selling, general, and administrative (SG&A) expenses, demonstrating a commitment to improving operational efficiency.
Financial Flexibility: Carvana secured a deal with creditors to extend loan maturities, providing the company with greater financial flexibility to navigate future challenges.
Investment Outlook:
Bullish Outlook: We are bullish on NYSE:CVNA above the $116.00-$118.00 range.
Upside Potential: With an upside target of $230.00-$240.00, investors should consider Carvana's strategic shift, competitive advantages, and improved financial flexibility as key drivers for potential stock appreciation.
📈🚗 Carvana is driving towards profitability—consider it for a potentially lucrative investment opportunity! #CVNA #UsedCars 🚗🚀
