HBI – Stocks Trading Idea of the Week – 11th Dec 2017
HBI Stocks Trading Idea – Short
The Wave5trade Elliott Wave Indicator suite has been used to put together this SHORT Stocks Trading Idea on HBI. As per the chart below the overall bearish trend can be seen and the automated Elliott Wave count indicates the HBI 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 an 80% probability that the 5th Wave will go on and make a new low in this current trend. The Pullback zones are part of our Elliott Wave Indicator Suite. We will discuss the remainder of the potential Short trade setup on HBI 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 HBI.
- The Wave 4 pullback has found resistance in the Amber Zone of our Specially programmed zones to indicate an 80% probability of the 5th wave making a new low.
- The 5/35 Oscillator (included in our indicator suite) shows the Wave 4 pullback is between 90% and 140% of the highest point on the oscillator during the 3rd wave.
- The Stochastic has crossed over in the overbought zone and is heading down.
- The Risk to Reward is 1:1.6 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 1.6% into the target zone. This is the minimum Risk to Reward suggested when trading the 5th Wave but we find often that a Risk to Reward of 1;2 or greater can be seen to our Target Zones.
- 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 HBI with the following.
Short Entry at $20.15
Stop Loss at $21.36 which is 0.03 above Wave 4 High
Target Zone $18
This can be Seen more clearly on the chart below:
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