Priceline in My Sights

 | Mar 16, 2014 | 6:00 PM EDT
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When a stock is making new highs at extensions of prior price swings, you will find a lot of traders wanting to get involved, because they feel they're missing the boat. But, more often than not, this is the wrong time to get involved in the market, as many moves tend to terminate at extensions of prior swings.

Instead of getting emotionally involved while trying to make sound investment or trading decisions, be patient and wait for a pullback into key support before you place a bet. Better yet, wait for a trigger that will tell you that it is worth placing a bet on the buy side before you even buy the pullback.

That brings us to Priceline (PCLN). The stock is finally undergoing a healthy pullback within a larger uptrend, so I'm willing to start looking at some price zones for a possible buy in the coming sessions.

Priceline (PCLN) -- Daily
Source: Dynamic Trader

Let's start with the daily chart. In addition to a couple of Fibonacci price relationships on this chart, I am also watching Fibonacci timing cycles that suggest a possible low with the time period illustrated on this chart -- March 17 to March 19, plus or minus a day. Watch these trading sessions in particular for a possible tradable low to develop.

Priceline (PCLN) -- Weekly
Source: Dynamic Trader

However, I actually prefer some of the more obvious levels on the weekly chart -- which has more data to consider, and is important in the case of Priceline. With this chart, we can see the prior larger declines that have occurred in the past, and I am able to come up with quite a few clear symmetry projections of prior corrective declines within the larger uptrend.

I consider this bigger-picture chart to be bullish as long as the current decline terminates somewhere above the February low of $1,103.90. Above that nadir, I've got four areas of support on my radar, but I'll be focusing on just these two: $1228.34 to $1237.23 and $1207.49 to $1208.97. (Of the other two, one comes in at $1267.89, just below Priceline's last close. The other is way below current levels -- between $1157.42 and $1162.76 area -- which the stock seems unlikely to reach anytime soon.)

Now, ideally the stock should test and hold above one of these support zones into that time zone, and then a buy trigger should follow on a 30-minute chart that tells us it is again worth placing a bullish bet on Priceline. If we don't have a perfect hit on price, I am still going to watch for a bullish pattern to develop on the 30-minute chart, and I'll set up an alternate strategy for entry purely using the timing cycles.  

Bottom line: I am stalking an entry in Priceline, but I'll be patient as I wait for a trigger. Remember -- no trigger, no trade entry! Also keep in mind that the S&P 500 remains in a precarious position -- so, as a general rule right now, we should proceed with caution and make sure our risk is well-defined.

Please refer here for more information on trade triggers.

See here for general guidance on Fibonacci trade setups.

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