Watching DirecTV

 | Aug 04, 2013 | 5:00 PM EDT
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A setup is coming together in DirecTV (DTV), so let's take a look at an old DirecTV trade first -- because, as a general rule in technical analysis, examining the past can help us to predict the future.

DirecTV (DTV) -- Daily (Old Setup)
Source: Dynamic Trader

The old setup is illustrated in the daily chart above: The stock hit a low on June 27 at the confluence of some beautiful price symmetry, along with a 0.618 retracement of a prior major swing and a 1.272 extension of a prior swing. The symmetry -- or coincidence of 100% projections of prior swings in the same direction -- was a main component of this setup. If you'll notice, the prior declines were all very similar in price: $7.15, $7.48, $7.46 and $7.35. Now, symmetry won't always hold, but because it does so quite often, it is very much worth watching.

In this old setup, the stock fell a bit short of the $67.81 area -- the initial upside target -- but we did see a rally to $66.50, or $8.04 away from the June 27 low.

Now that we've looked at an example of how symmetry has held up in the past, let's look at the current chart setup on DirecTV.

DirecTV (DTV) -- Daily (Current Setup)
Source: Dynamic Trader

For this new setup -- which has not yet signaled a buy entry -- I'm looking at price support between $58.47 and $60.25. I have included the 100% projections of those same prior declines from the chart example above, along with other key Fibonacci price relationships. Besides the price support, I also see a confluence of Fibonacci time cycles that come together between July 31 and Aug. 5.

As long as the price holds above the price-cluster zone, I'll remain interested in taking buy triggers via a 30-minute chart. The upside potential right now shows up at the $68.32 area. Risk can be defined either below the low end of the price cluster, or under the low that the stock hits before a buy trigger fires off.

I will back off the buy side if the price cluster zone is violated.

For more information on trade triggers, please refer here.

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