Looking for a Secondary Entry on LinkedIn

 | May 15, 2013 | 9:00 AM EDT  | Comments
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Stock quotes in this article:

lnkd

When I talk about a trade setup, many traders will ask me, is it too late? Can I still do this setup? My answer will depend on whether we have met the target for the actual trade setup.

So today, let's look at a trade setup in LinkedIn (LNKD). The most important part of this trade setup is the symmetry you can see with the prior declines on this daily chart. Note that I have labeled two prior declines on this chart: $32.63 and $30.75. Those are kind of similar in price. I projected 100% of both of those prior declines from the recent high made on May 2.

LNKD Daily
DynamicTrader

Now we have violated the first projection, so that is no longer on the chart. When a level is violated by a decent margin, it no longer has any value, as far as I am concerned.

The second projection, along with a couple of price extensions, did end up holding, though. Note that the recent decline into the May 10 low was very similar to the prior two declines, as it was $32.04. The zone that ended up holding came in at the $168.26-$171.22 area. The actual low was made at $170.87.  

Since the initial upside target for this setup does not come in until $211.62, I don't believe it's too late to get involved. What I like to see, however, is a pullback, so I don't give away the edge! At this point, what I will look for is anywhere between a 50% and .786% retracement back to the recent lows for an entry. If you want to fine-tune an entry even further, you can actually wait for at least another trigger after the pullback. For example, you can wait for a five-minute chart to trigger an entry after you see at least a 50% pullback.

Here is an example of a pullback to the recent low on a 30-minute chart. The levels will have to be recalculated if a new high is made first.

I will consider myself wrong if the May 10 low is taken out.

LNKD, 30-Minute
Dynamic Trader

For more information on trades and triggers, please click here.

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