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For any given stock, a major setup does not come around that often on the daily chart. But, if you don't manage to get in on the initial play, you can still fine-tune a secondary entry. Let's take a look at a setup within a bigger-picture setup in Under Armour (UA) -- a stock found in a number of ETFs, among them Rydex S&P MidCap 400 Pure Growth ETF (RFG), First Trust Consumer Discretionary AlphaDEX Fund (FXD) and iShares S&P MidCap 400 Growth Index Fund (IJK).
Late December 2011 saw a key time and price setup in Under Armour. The actual low was made at $69.69, on Dec. 21, into a key price cluster zone within the Fibonacci time cycle of Dec. 21 to Dec. 26. You can see both the timing cycles and the price work on the daily chart below. I'm still looking at a key upside target off this original setup around $92.22. Under Armour is now trading at around $82.52, and it's currently experiencing a pullback.
Since I'm still seeing a minimum upside target for a move toward $92.22, I can set up support on this pullback, looking for another possible entry on the buy side. On this new entry, I would not be defining maximum risk as being below the original Dec. 21 setup low. Instead, my maximum risk would end up defined as below the low end of the price cluster zones seen above.
The new support decision is calculated by running new Fibonacci price retracements, price extensions and price projections. The areas that stand out are $81.58 to $82.07 and $80 to $80.84. As long as the price tests and holds above one of these key zones, I will look for another possible buy entry in this stock.
If it does hold, we'll want to look for a buy trigger before entering. Keep in mind that, when considering a swing trade entry, the 15-minute chart is only for an aggressive entry. The 30-minute chart is a more conservative one to use. For more information on how to trigger into a trade setup, please refer to my article on trades and triggers.
If these key support decisions did not hold, I'd back off the buy side until further notice. I'd also exit any long positions taken against the original Dec. 21 low.