Scrutinizing a Trade Setup

 | Sep 25, 2013 | 8:30 AM EDT
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I spy a trade setup in Iconix Brand Group (ICON). I like the bullish pattern of higher highs and higher lows and the symmetrical pullbacks. What do I mean by that??

The definition of symmetry is similarity or equality when comparing swings in the same direction. Within this uptrend in ICON, I have taken many of the prior declines that you can see on this chart and projected 100% of those from the most recent high made on 9/10.

I do this because I have found in the past that many prior corrective declines tend to be similar to others in any stock or ETF. The symmetry projections on the chart below are all represented in red. You can see that there are multiple projections that we are currently testing right here right now.

The first key support decision in this stock is what we are testing here at the 32.27 to 32.63 area. Besides the 100% (symmetry) projections, there are also some overlapping Fibonacci price retracements and extensions of prior swings. This is where the clustering (more than three price relationships coming together in a relatively tight range) effect is coming from.

I do have one other area of support I would consider for a buy entry and that comes in a bit below the market at the 31.31 to 31.93 area.  So far, zone # 1 is holding. If price continues to hold above this key area, the initial upside target comes in at the 35.20 area. Target 2 comes in at 35.92 and target 3 at 38.00. If I end up taking a buy entry against this zone, my risk will be defined below it.

Besides the Fibonacci price clusters I'm seeing, I have also included my Fibonacci timing work on the same daily chart. We have time cycles that also suggest a possible low that come due between 9/23 and 9/25.

Typically, I use what I call a "trigger" to indicate an entry where it is worth placing a bet against a specific zone. For more information on those, please check out this link.

 I will consider myself wrong the trade if both of the key support zones defined on the chart below is violated.

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volatility is quite low here, and we could see some downsides here in the short term. ...



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