Update: Pofit target reached. Stop raised to the entry and 50% is riding the possible continued reversal. See comments section. Congratulations to the believers.
Previously posted: The following technical analysis video for Nvidia Corp. stock shows that despite the bears looking good with the existing downtrend, bulls can start planning a series of buys, and set buy orders at lower prices, as they target a reversal.
I have invented this method which I have not seen anywhere else. I call it the 'Fibonacci Entry'. Why?
Because as the price goes down, a Fibonnaci series of orders is set.
- 1 NVDA stock is bought
- Then 2 NVDA stocks are bought at a lower price
- Then 3 NVDA stocks are bought at a lower price
- then 5, 8, 13, etc...
- The length of the Fib series is up to you. So are the entry prices (which, ideally, should match some logic on the price chart, according to the technical analysis, its pattern, price levels, etc).
I show a detailed example of this, and the key element of average weighted entry price, so watch this NVDA technical analysis video and trade idea:
Now, some people may see the massive selling in the stock market and Nvidia and call me crazy, a gambler. They say that traders MUST go with the trend, must wait for confirmations, must watch the MACD or other indicator, wait for a catalyst. etc, etc. People say lots of things.
My answer is: There is more than one way to play this game. And it is, by no means, crazy. Crazy is having a trade plan that lacks a stop.
Or having one that sucks so bad, in terms of its reward vs risk and probability of winning, that it makes it look crazy. I am by no means crazy, in this sense.
Moreover, I think that many traders that would wait for too many confirmations with Nvidia stock or any other, in many (not all) cases, within a volatile phase of the market and not a tight bull market, are highly exposed to being stopped out when and if entering the trade too late. This happens to non professionals all the time.
Some pro traders have an approach that basically says:
"I am buying NVDA stock ONLY if I am getting an excellent price. And lower what it is now. If I am not getting that price (not getting filled) then fine, I missed the buy. I am only getting in once I get that excellent price."
Some pros seek more technical confirmations and can still win, and win big. No doubt about it. Again, there is more than one way to play this game.
In summary, this analysis and trade plan shows 1 of many approaches and strategies of anticipating a move before it may or may not come,
and casting a net of lower entry prices to average out an excellent average entry. By 'excellent' it means that it is much lower than the
current price and there is some idea about why the trade should work, according to the technical analysis at hand. 'Excellent' by no means says that the trade is going to win in 100% probability.
Liked the idea of scaling in a possible Long (at your own risk) for this chip maker? Pleae let me know your thoughts in the comments section, where future updates may be provided as Nvidia stock moves along its timeline.
Visit ForexLive.com technical analysis for some interesting perspectives.
******* Correction of a typo in the above NVDA technical analysis video: The Fib series is 1, 2, 3, 5, 8, and then 13 (corrected from 11). So below are the updated entries and the average weighted entry, stop loss and take profit targets for the NVDA Long position. Naturally, not all buy orders may be filled and stay tuned for further updates.