Shopping for New Shoes

 | Jun 19, 2013 | 7:16 AM EDT  | Comments
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Stock quotes in this article:

nke

,

cop

Let's take a look at a new setup in Nike (NKE) after we look at an old one first on the weekly chart.

Quite some time ago I started watching NKE on the weekly chart. At that time there was a huge corrective decline that was extremely similar to a prior decline on that chart. This is illustrated on the chart when we saw a $14.88 decline into the March 2009 low that was very similar to the decline we saw into the June 2012 low. This symmetry, or similarity, held up, and a healthy rally was seen into the recent highs in this one May of this year. Almost two upside targets have been met. The next decision I'm looking at in this one is a Fibonacci price cluster of support on the daily chart. There is some shorter-term symmetry" on the daily chart setup now. Let's take a look at that next. 

 

Nike (NKE) -- Weekly
Source: Dynamic Trader

 

On the daily chart below, I have illustrated some risk/reward parameters for another buy setup in this stock. The price cluster (coincidence of three or more Fibonacci price relationships that come together within a relatively tight range) comes in at the 60.30-61.07 area. This zone includes a .618 retracement along with multiple 100% projections (symmetry projections) of prior declines and at least one price extension of a prior swing. So far, price is holding above this cluster with the recent low being made at the confluence of Fibonacci timing cycles that are also suggesting a tradable low could be in place.

 

Nike (NKE) -- Daily
Source: Dynamic Trader

 

Bottom line, if NKE can continue to hold above this price cluster of support, I am a buyer with my max stop below the $60.30 area. The initial upside target we would be watching for if this scenario starts to play out is the 1.272 extension at the $67.44 area. Since not every trade setup is going to play out or make the upside target, I would also suggest using a trailing stop if NKE starts to move in your favor. If the price cluster is violated, I will consider the trade setup a bust.

ConocoPhillips (COP) is an example of one of my recent trade setups that failed. But I did have another entry on top of some new time/price parameters.  Note that the last decline in COP lasted 16 trading days into the April 17 low.  The most recent low made on June 13 was also 16 trading days down from the most recent high. If the COP setup plays out this time around, $65.96 is the upside target. The risk can be defined below the June low made at $60.38.

 

ConocoPhillips (COP)
Source: Dynamic Trader

 

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