PYPL - Time To Buy The Bounce Indexes - specifically SPX and NDX look ripe for a bounce here and so I have scoured through many charts to find one that has an ideal setup for a bounce.
And so I have chosen PYPL as my favourite and also ROKU as a second choice. There are a few others that I may cover - ADBE and WBD, but I probably won't actually trade those.
Anyhow PYPL is my favourite because -
Its had an enormous 77% collapse.
It has a clean 5 wave impulse with tidy fibonacci. The most relevant is the 0,1,2 1.618 extension which I think is the anchoring fib @ $81.34 and the short range fibs cluster in this area.
9 May weekly hammer and on on the daily there is a morning star candle pattern with gaps wither side.
The wick of the weekly hammer forms a shakeout reversal pattern through Oct '18 support.
Back to indexes and both NDX and SPX are hovering around their 1:1 extensions and if both close above they will close "green" for the first time since March top.
And around the 1:1 fib, a wyckoff accumulation appears to be printing with BC Buying Climax striking the fib and then ST Secondary Test forming a shakeout reversal pattern with the wick of the hammer.
NDX weekly RSI has fallen below the lower band for the first time since 2008!
4H RSI has hidden then bullish divergence coming in.
All these factors add confluence to the potential for a bounce here. If this week's candle does close "green" then I think good chance next week's will also.
And while NDX is in apparent indecision PYPL has been holding the $77 area since the bounce. With price moving sideways, there should be a good chance it is ready for a bounce.
On the 4H chart the low is a hammer and I have placed my stop loss below the hammer + 4H ATR $2.67 = $69.18, to give a little room in case there is a double bottom before moving up. In future with a bit more experience I may use a tighter stop loss to hold a larger position but this will do for now to give it every chance.
And so this is a trade with defined risk of 1%. If it does bounce then I think my target will be the 0.618 $177 retracement where there is also resistance @ $172.
It may also be an idea to wait till next week or until PYPL gets back above the 1.618 @ $81.34 but I think i've seen enough and would like to catch the initial pump. Being early means less potential loss and more potential gain, but with less confirmation adds difficulty. Time will tell if that was the right decision or not. I think it will be but we'll see.
This is a 10:1 RR trade.
Not advice.
