Get Your Hooks in LinkedIn

 | Jun 09, 2013 | 12:30 PM EDT
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The name of the game is not always being right. That's just not realistic. It's more about having a plan, defining your risk and having a reason to place a bet or enter a given stock.

With that in mind, let's make the case for the buy side in LinkedIn (LNKD), starting with the daily chart -- and with Fibonacci price analysis. The stock's recent low was made at the confluence of four key price relationships: a 0.382 retracement of one swing, a 1.618 extension of two other swings and a 100% projection of a prior declining swing.

LinkedIn (LNKD) -- Daily
Source: Dynamic Trader

That last projection is illustrated on the daily chart below: The stock declined $32.04 from the May 2 high into the May 10 low, and in the second swing -- from the May 15 high to the June 5 low -- it sank a very similar $32.36. I call this "symmetry" in price action: similarity or equality when comparing swings in the same direction.

Now, I am also seeing some key Fibonacci time-based parameters. As you can see on the chart, the cluster of timing relationships came in between May 31 and June 7 -- in other words, this date range marks a point within the current decline when other recent pullbacks have tended to end. When a stock is trading lower into a time cluster, that tells you to look for a possible reversal back upward. For the most recent decline, the low -- so far -- came on June 5, directly within this cluster.

LinkedIn (LNKD) -- Daily (Time Cycles)
Source: Dynamic Trader

The above chart highlights this time symmetry: As seen above, two prior pullbacks lasted 20 trading days, and one lasted a similar 25 days. This most recent low marked a comparable 23 sessions into the recent decline, which I like.

LinkedIn (LNKD) -- 30-Second
Source: Dynamic Trader

We've already seen a buy trigger fire off, which I've illustrated in the third chart. This indicates that it's worth placing a buy-side bet on LinkedIn against the most recent low. If the price continues to hold above that June 5 low, the upside potential is to the $214.53 area. On the other hand, if that low is taken out, I will consider myself wrong in the trade.

For more information about trade triggers, please refer here.

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