I'm stalking LinkedIn (LNKD) for another buy entry. I like that the overall pattern on the daily chart is still bullish, with higher highs and higher lows. I also like the fact that price is currently above the 200 simple moving average and the 50 SMA. I also like that so far we are seeing a symmetrical pullback into support that comes in above a prior swing low made on Dec. 9, 2014.
There are actually two support clusters that I'm considering the buy side against. The first one comes in at the $222.66-$224.13 area. The second zone comes in at $219.61-$220.35.
Besides the key price support, I'm also looking at some timing parameters that come due between Jan. 2- Jan. 6. When I see a clustering of Fibonacci time cycles, this is when the odds are higher for a reversal of whatever the market is doing, as you move into the time cycles.
So since LNKD is trading down into key timing, it supports watching for a reversal back up. Now, if the rally does resume in earnest, the minimum upside target at this point is the $248 area.
Next I want to discuss the 30-minute chart of this stock and what we want to see next if this support is potentially more important.
As far as the 30-minute chart is concerned, I'm comparing the recent rally swings since the Dec. 19 high was made. These rallies were between $6.98 and $7.18. The current rally off the most recent low has lasted $5.99 so far. To have any confidence that the recent bounce from our first support zone has legs, I really want to see a rally for more than $7.18. Actually, I want to see this cleared by a decent margin, not just 50 cents or so.
For me, a decent margin would be at least a couple of bucks more than the prior largest rally. On top of the projection of $7.18 from the recent low, there are also multiple price relationships that overlap that and other projections, and the zone comes in at $230.17-$232.25. Note that we are currently right up against this resistance.
So how do you play LNKD then? At this point, I am watching the pullback to the most recent low for a possible entry with a trigger, rather than buying here right at a resistance decision.
Alternately, if we blow through the 30-minute resistance decision, I would buy a pullback after that occurs. I can define my maximum risk below the low end of the daily support described above.