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These stocks can extend their uptrend

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The S&P 500 has broken out to new lifetime highs and has closed above the critical psychological resistance level of 2500, albeit marginally. Nevertheless, the index is likely to gain momentum from here on, extending its aging bull market gains, as the shorts will be forced to cover.

Key points

  1. The S&P 500 has broken out of the critical overhead resistance level of 2500
  2. Stronger stocks are likely to outperform if the index continues higher
  3. However, at these elevated levels, traders should enter stocks only if the risk to reward ratio is attractive
  4. Allocate less than 50% of the normal position size while trading pure momentum plays

Therefore, this week, we have selected a few stocks that have broken out to new highs and are likely to extend their gains along with the index. However, traders should keep in mind that the markets are richly valued at the current levels and can quickly turn down from here. Therefore, please close the long positions if the stop loss is hit.

Also, as the stocks rally, please keep trailing the stop loss higher to protect the paper profits.

BA – Buy 250, SL 236, Target 265 and higher

Weekly chart

Boeing started an uptrend in end-2016 after consolidating for about three years. It gained momentum once it broke out to new highs in 2017. Since then, the stock has been in a vertical rally, outperforming the index, which has pushed the RSI into the overbought territory.

Nevertheless, after consolidating for the past few weeks, the stock again broke out to new highs last week. We expect the uptrend to continue, therefore we want to piggyback on it for quick gains. Let’s look at the critical levels to watch out for.

Daily chart

Boeing broke out to new highs on Friday. The consolidation of the past few weeks has corrected the extreme overbought conditions on the RSI. With the latest breakout, we expect the stock to resume its uptrend and rally to $265 levels. The stock can easily surpass its target if the momentum sustains. Therefore, traders can enter at $250 and keep a stop loss of $236. This trade offers a risk to reward ratio of 1:1.

NSC – Buy 128, SL 120, Target 140

Weekly chart

The stock bottomed out in February of last year and rallied until February of this year. Thereafter, the stock entered a period of consolidation that lasted for almost seven months. Last week, the stock broke out of the stiff overhead resistance of $125, which shows that the bulls have regained their strength. We now expect the stock to resume its uptrend.

Daily chart

On Monday of the previous week, the stock broke out of $125, which had been acting as a stiff resistance. Thereafter, it extended its gains during the remainder of the week. This shows that the bulls are willing to buy at higher levels. We can buy the stock at $128 and keep a stop loss of $120. We don’t want to hang on to the stock if it falls back into the range. The first target objective is $140. This trade carries a risk of $8 and a probable reward of $12, if it performs according to our expectations.

MED – Buy 57, SL 54, Target 68

Weekly chart

The stock has a history of vertical rallies, as shown on the chart. This time too, the stock has embarked on a similar sharp up move. Therefore, we want to hop on this ride, expecting it to continue higher. If proven correct, this can be a rewarding trade. However, historical evidence shows that the stock falls sharply once the uptrend ends. Therefore, please strictly adhere to the recommended stop loss.

Daily chart

The stock rose vertically from $42.12 on August 08 to $56.41 on August 18. Thereafter, the stock entered a shallow correction, which was arrested just above $54 levels.

If the stock breaks out and closes above $57, the next leg of up move can carry it to $68 levels. As this is a pure momentum play and has a history of correcting sharply from its highs, we don’t want to keep a deep stop loss. Our stop loss should be below the recent swing lows, at $54. Please trail the stops higher as the stock continues its journey northwards. The risk is $3, while the reward is $11. However, this is a risky play, therefore, please trade it with only 50% of the normal allocation size.

MYOK – Buy 48, SL 40, Target 70

Weekly chart

In the past two months, the stock has almost tripled in value. This shows a very strong momentum in its favor. As a result, the RSI has become extremely overbought. However, the correction only lasted for two weeks, which shows that the bulls are piling on the stock on every small dip. The stock is likely to resume its uptrend once it breaks out to new highs.

Daily chart

After being range bound for most of 2017, the stock broke out with a huge gap up on August 07 and has never looked back. It has almost tripled in value since then, which shows the strong momentum behind it. After a shallow correction, which was arrested just above $40 levels, the stock is on the verge of a breakout to new highs once again.

The stock can be purchased at $48 and the stop loss should be maintained at $40. We don’t want to hold the stock below this level. On the upside, the stock can rally to $70 levels if it can build up momentum once again. However, we recommend trailing the stop loss higher once the stock moves up as it is a high-risk trade. Also, please keep the allocation size small, about 50% of normal.

PEGI – Buy 26.3, SL 23, Target 31

Weekly chart

The stock has not broken out to new lifetime highs; however, it is quoting at its 52-week highs. We like the stock because it has broken out of a bullish ascending triangle pattern, which has a target of $31.59. The stock offers a decent risk to reward ratio, therefore, we want to buy it.

Daily chart

Usually, a breakout pulls back and retests its earlier resistance level, which in this case is $25.13. However, sometimes, the breakout continues higher and never looks back. If the markets remain bullish, we might not get a pullback.

Therefore, we want to buy the stock at $26.3 and keep a stop loss of $23. We don’t want to hold the stock if it falls and sustains below $25 levels. Our target objective is $31. The risk is $3.3, while the probability of reward is $4.7. This is not a momentum play; hence, this is likely to rise slowly.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 9 rated postsRakesh Upadhyay is a Technical Analyst and Portfolio Consultant for The Summit Group. He has more than a decade of experience as a private trader. His philosophy is to use technical analysis for momentum trading and fundamental analysis for long-term positions. Rakesh likes to keep himself fit by lifting weights and considers himself to be a spiritual person.




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Trade Recommendation: Basic Attention Token

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The Basic Attention Token/US Dollar (BAT/USD) pair climbed as high as $0.3877 on November 8, 2018. This move was fueled by the anticipation associated with the market’s Coinbase listing. Many market participants believed that Basic Attention Token would pump after getting listed on the exchange. This logic is sound but the market is highly illogical so it moved in an unexpected manner.

BAT was a sell on news as it dumped 28% overnight after the Coinbase listing. It has been dumping in the last few days but it looks like the end is in sight.

Technical analysis shows that Basic Attention Token is en route down to support of $0.2375. We are confident that this area will hold for several reasons.

First, the market’s dump is so steep. It happened with very little consolidation and almost no pullbacks. This is not sustainable. It’s only a matter of time before bears face exhaustion.

On top of that, we looked at the 4H RSI and saw that it is resting above support of 32. The indicator is in near oversold territory. This tells us that bears cannot keep up this rampage for long.

Lastly, volume has been declining since the November 8 dump. This is another indication of bearish exhaustion. Without volume, bears will not have the strength to take out support of $0.2375.

The strategy is to buy the dip as close to $0.2375 support as possible. If bulls hold this support, the market will likely consolidate for a bit before bouncing to our target of $0.30.

The process may take less than a month.

4-Hour Chart of Basic Attention Token/US Dollar on Binance

As of this writing, the Basic Attention Token/US Dollar pair is trading at $0.25822 on Bitfinex.

Summary of Strategy

Buy: As close to $0.2375 as possible.

Target: $0.30

Stop: $0.2273

 

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.7 stars on average, based on 265 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Trade Recommendation: Ripple

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Ripple (XRP/USD) has been the strongest big cap cryptocurrency lately. Even if Bitcoin Cash (BCH/USD) made some big moves last week, Ripple kept in pace as it made breakouts of its own. On November 6, 2018, XRP/USD took out resistance of $0.50 and climbed as high as $0.562.

This was an important breach as $0.50 used to be the market’s parabolic support. Ripple skyrocketed on December 14, 2017, when it went above $0.50. It was flipped into a key resistance on June 22, 2018, during the height of the bear market. XRP/USD has been trying ever since to take it back for good. Today might be the day it does so.

Technical analysis shows that Ripple is currently retesting support of $0.50. We believe that bulls will hold for the following reasons.

First and most important, the 200-day moving average (MA) just crawled below the daily candle. This is a huge development. Moving averages act as supports or resistances depending on whether they’re below or above the candle. So instead of looking up and finding strong resistance in the 200-day MA, it is under the daily candle, giving it a very nice boost.

In addition, $0.50 is a key psychological level. If the market is above it, it becomes a demand zone. On the other hand, if Ripple is below it, it becomes a supply area. Right now, Ripple is around that level.

Almost no one’s selling at these levels because participants know it is a buy zone. With no one selling, positions are scarce, hence the low volume.

The strategy is to buy at the current price of just under $0.50. If Ripple successfully completes the retest, the market will likely break out of the triangle and rally to our target of $0.70

The process may take a month.

Daily Chart of Ripple/US Dollar on Kraken


As of this writing, the Ripple/US Dollar pair is trading at $0.49475 on Kraken.

Summary of Strategy

Buy: Current price of $0.49554.

Target: $0.70

Stop: $0.47

 

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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2 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 5 (2 votes, average: 5.00 out of 5)
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3.7 stars on average, based on 265 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Trade Recommendation: Decentraland

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The Decentraland/Bitcoin pair (MANA/BTC) took out resistance of 1,230 satoshis on November 8, 2018. This triggered the breakout from the inverse head and shoulders reversal pattern on the 4-hour chart. The breakout looked strong as well. On that day, MANA/BTC generated volume that’s over 430% of its daily average. This sparked a rally to 1,462 satoshis on the same day.

Before November 8 closed, however, MANA/BTC started to show signs of weakness. It started to print a long wick on top of the 4-hour candle’s body. On top of that, the RSI was in extreme overbought territory. Also, it created a double top at resistance of 77 RSI. These are very good signals to start locking gains and that’s what we’re saw a few hours ago. Nevertheless, there may be a good chance to buy when MANA dips again.

Technical analysis shows that MANA/BTC is looking retest support of 1,230 satoshis. This pullback should give technical indicators time to cool off. More importantly, it helps the market create a new base of buyers. The new batch of bulls will be instrumental in the pair’s uptrend.

But first, MANA/BTC must complete the retest or else the breakout is not validated. We believe that bulls will be successful for a couple of reasons. First, 1,230 satoshis used to be a strong resistance. It was so strong that bulls needed seven attempts in three months to breach the resistance. Now that they’ve broken through, the firm resistance is flipped into durable support.

Second, we have the 21-day, 100-day, and 200-day moving averages crawling below the 4H candles. They will stand as additional supports to help keep the market above 1,230 satoshis.

The strategy is to buy the dip as close to 1,230 satoshis as possible. If MANA/BTC completes the retest, it will likely to launch a rally to our targets of 1,500 satoshis first and then 2,000 satoshis.

The process may take more than a month.

4-Hour Chart of Decentraland/Bitcoin on Binance


As of this writing, the Decentraland/Bitcoin pair is trading at 1,420 satoshis on Binance.

Summary of Strategy

Buy: As close to 1,230 satoshis as possible.

Target: 1,500 first and then 2,000 satoshis.

Stop: 1,150 satoshis.

 

NOTE: a satoshi is the smallest unit of Bitcoin, which equals to 0.00000001 BTC.

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
1 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 5 (1 votes, average: 5.00 out of 5)
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3.7 stars on average, based on 265 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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