Stalking Monsanto for an Entry

 | Jul 03, 2013 | 7:00 AM EDT
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We have had winning trades in Monsanto (MON) and some losing trades too. The goal, however, is to let the winners run and cut the losers short and have the winners outweigh the losers. This can be done if you define your risk in advance and if you also manage your trades when they do start to play out in your favor.

With that being said, I have identified another key support decision in Monsanto that I am stalking for a possible buy entry.


MON Daily


This is a Fibonacci price cluster setup, which is one of the three trade setups that I work on identifying via the charts every trading day. A cluster is the coincidence of at least three Fibonacci price relationships that comes together within a relatively tight range. These clusters identify key support or resistance decisions.

In this case, I'm looking at a key support decision with a cluster of price relationships that come in between $94.19 and $96.71. This cluster actually includes the coincidence of nine or 10 price relationships. That does not mean that the zone will definitely hold, but it does tell me that this is a rather important decision.

Some traders may approach this setup and say. "OK, I will buy some Monsanto at these levels and consider myself wrong if price breaks below this zone by a decent margin". (A decent margin to me would be a couple of bucks in Monsanto). Personally, I like to use what I call a trigger. This is essentially price action that tells me it is worth placing a bet against a key zone. Even though trades can still be stopped out when using a trigger for an entry, I like to see at least some promise with a reversal indication.

This article will explain what I use.

Now, if price continues to hold above this general area, I see upside potential anywhere between the $102-$106 area initially. If those tests are passed, I will post targets beyond that later. Once again, I will consider myself wrong on the trade if this key price support cluster is violated by more than a couple bucks. There are also ways to refine the risk even further which are discussed in the article above.

Let's see what Monsanto does against this key support zone and trade accordingly!

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