IP trade ideas
WYCKOFF SHORT ON IPMy charts are setup initially to look for Wyckoff trend continuation patterns, such as re-accumulation and re-distribution, because in general it is better to trade "with" the trend rather than against it, but sometimes these patterns fail and lead to distribution, such as I think is the case for IP.
Ultimately it is tough to differentiate between a congestion (re-accumulation) pattern and a distribution pattern, if not impossible, until after the Sign of Strength (SOS). If there is a weak, low volume retest of the Spring (SP), then a continuation of the trend is more likely. But when the Spring (support) level is broken it then becomes the new ICE level indicating a strong chance of retesting the prior major support level. The entry we look for is a retest of this ICE level, known as Backing Up to the ICE (BUI), which is currently forming. Also, there is background weakness shown by a regular divergence at Secondary Test (ST) level, then increasing volume on the down wave to the Spring (SP) level, then hidden divergence at the Sign of Strength (SOS) level, then increasing volume on the Breaking the ICE down wave, and so far a weak rally back up to the ICE level.
Conservative entry would be a break of the Breaking The ICE (BTI) level, with initial stop above the swing high, initial target at the last major support level at $45.25, this gives a Risk:Reward ratio of 1:2.68, which is more than acceptable (generally greater than or equal to 1:2 is preferable, of course all traders are different and this is just my opinion).
Second possible entry would be after a new downtrend bar prints on the Weis Wave Indicator.
And finally, an aggressive entry would be the first LL bar during the BUI rally that we are currently in.
Note: there is a potential major support level at approx. $50, which has acted as significant resistance for approx. the last year. Also the major support level that is the target is also approx. the major support level of the trading range for the last year.
IP Aiming for a 10% Break Out IP has been trading along an uptrend line, from June 2012 to June 2013, reaching as high as $48.68.
However from June 2013 to now, price has been consolidating sideways between $43 to $50, for about 15 months. This is essentially a very clear Rectangle chart pattern, which indicates a pause in the upward trend in , with an intention to resume the uptrend in the future.
In other words, price has been consolidating and "storing energy" for 15 months, for an eventual break out.
We observed that currently that price is attempting to break out to the upside. One may question why the current attempt to break out will succeed, when so many attempts have failed in the past 15 months.
If we look closely at the pink box, we see a brief period of support buying at $48.80s with price ending at $50.62 on 31 Oct 2014. This makes it different from previous attempts where price was sharply sold down when reaching around $50.00.
Therefore we project that the $48.80 support buying at will lead to a breakout of the 15 Month Rectangle pattern of and resume the upward trend.
Breakout Condition:
When price can convincingly close above 50.65.
Stop Loss:
Below $48.80
Taking Profit:
The theoretical Take Profit Target will be $56.00, based on the height of the rectangular pattern.
However, given the long period of consolidation, there's a good probability of price exceeding the theoretical target.
A more advanced method will be to Take Profit by Oscillator, where we can take profits when the Relative Strength Index (RSI,14, Close) is close to reaching 70.00.
Leaving Some Money on the Table:
Should the profit targets be successfully met, we may also consider leaving a small position open and catch the general drift of the uptrend. This will be suitable for those who don't mind holding positions and stomaching reduction in marked to market profits, so as to potentially capture higher price moves in the longer term.
Risk:
There is always a risk that this is yet another false break out.
Hence the tight stop loss below $48.80.
References:
More about Rectangle Chart Pattern> www.babypips.com
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International Paper is Juiced Up and Ready to RoarAn underfollowed name, IP recently had a death cross a while back which made me fairly bearish, however since then IP has come roaring back, and the last 4 days has closed on gap fills with HUGE volume well above average vol, since this has filled a number of gaps, I believe this is well set up to reach new highs in the near term, an easy stop is at the volatility stop of 47.68 for a trade
IPElephant Candle to the left signal major interest. Held above Fib 38.2 & EMA30. Bull Move Next Week. VOL+++
