Looking Primed for Entry

 | Aug 07, 2013 | 8:00 AM EDT  | Comments
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Stock quotes in this article:

axp

,

yhoo

When we look at the chart of American Express (AXP), we can see that the general trend and pattern is bullish. I see higher highs and lows, and the stock is at least clearly above the 200-day simple moving average. In addition, the stock is holding above what I call a Fibonacci price cluster, or the coincidence of at least three key Fibonacci price relationships within a relatively tight range.

American Express (AXP) -- Daily
Source: Dynamic Trader

In the case of AmEx, at least seven price relationships are overlapping each other in the $71.86-to-$73.25 area. Now, a recent low has been made at $73.47, which is close enough.

On top of that, a buy trigger has fired off on a 30-minute chart, and that tells me a buy-side bet is worth making against this key zone. If AmEx continues to hold above the recent July 31 low, target 1 will come in at $80.03. Target 2 is $81.82, and target 3 is $86.98. I will consider myself wrong if the price cluster of support is violated.

I have one more setup in Yahoo! (YHOO), though this one has not triggered a buy entry just yet. I see a two-step pattern in this stock, with a level of possible support between $25.83 and $26.87. If Yahoo trades down into this zone, I will watch for buy triggers on either a 15- or a 30-minute chart and see if one fires off.

Yahoo! (YHOO) -- Daily
Source: Dynamic Trader

If a trigger does materialize, the initial upside target will be somewhere above the $30 area. A more precise target can be calculated once a low is defined. However, I would back off the buy side here if this key support is violated by a decent margin.

For more information on trade triggers, please refer here.

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