BITA – Short Stocks Trading Idea of the Week 15th Jan 2018
BITA Stocks Trade Idea – Short
The Wave5trade Elliott Wave Indicator suite has been used to put together this SHORT Stocks Trade Idea on BITA. As per the chart below the overall bearish trend can be seen and the automated Elliott Wave count indicates the BITA (Bitauto) stock has pulled back against the main Bearish trend on a Wave 4. The wave5trade strategy involves trading the 5th Wave of the Elliott Wave sequence as it is the highest probability move in a “with trend” trade. The Wave 4 has pulled back and found resistance in the Amber Pullback zone, which indicates a 80% probability that the 5th Wave will go on and make a new high in this current bullish trend. The Pullback zones are part of our Elliott Wave Indicator Suite. We will discuss the remainder of the potential Short trade setup on BITA below this chart.
There are quite a few elements that are included in our Elliott Wave Indicator Suite for the NinjaTrader NT8, Thinkorswim and TradeStation Platforms. Lets discuss in order to build up the picture of this potential Short trading opportunity on BITA.
- The Wave 4 pullback has found resistance in the Amber Zone of our Specially programmed zones to indicate a 80% probability of the 5th wave making a new high.
- The 5/35 Oscillator (included in our indicator suite) shows the Wave 4 pullback is between 90% and 140% of the lowest point on the oscillator during the 3rd wave.
- The Stochastic has crossed over in the oversold zone and is heading up.
- The Risk to Reward is 1:2 to the automated Target zone that our Elliott Wave Indicator Suite plots on the chart. So risking 1% of trading balance between stop loss and entry gives a potential reward of 2% into the target zone. The minimum Risk to Reward suggested when trading the 5th Wave is 1:1.6 so in this particular case we are over this into the target zone.
- The Entry strategy is developed using previous price action AND importantly below the 6/4 Moving Average Low (Red MA line on chart) which is also part of our Elliott Wave trading indicator suite.
So in this case we can see that we have a great deal of evidence that the Wave 4 has behaved as expected and we have a good risk to reward for the trade. This gives a high probability of success for a Short Trade on BITA with the following.
Short Entry at $33.92, which is below the 6/4 MA Low and above the whole $34 psychological support level.
Stop Loss at $38.42 which is above the wave 4 high.
Target Zone $24
This can be Seen more clearly on the chart below (click to enlarge, then backspace on your browser to return to this post):
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