I just wanted to do a quick new blog post covering the recent $YANG trade I made. I wanted to highlight the technical aspects of this setup and how I spotted it early and was able to capitalize on it. This was an officially alerted Art of Trading trade so we will step all the way through the trade from start to finish!
So, what initially caught my eye about this $YANG setup?
Last weekend (2022-07-23) While doing my scans for the upcoming week I noticed that a lot of the BIG Chinese stocks had similar chart patterns.
Chinese stocks were first to bottom in early March 2022, but then in the last 2 or 3 weeks many names started showing signs of rolling over after 100% - 200% moves off March lows.
I tweeted this:
This is what those charts looked like:
$NIO: A series of lower highs
$BIDU: Triple top and then a series of lower highs
$PDD: Another triple top and then a failure below the 20 EMA
$LI: Triple Top, loss of support and a loss of the 20EMA
After reviewing these charts, I started to dig deeper. I started coming across news articles talking about new lockdown efforts. I knew lock-downs have serious consequences and this just adds a catalyst to the already weak looking stock charts. I knew there would be a high likelihood that these stocks would continue to trade down into the coming week with this information on hand!
So, how did we trade these short setups?
Chinese stocks individually are quite volatile. I knew if I wanted to get a high probability trade out of this that going an individual stock route might not be the best idea. The possibility of getting stopped out prematurely because of wild intra-day gyrations or just getting unlucky with a stock getting a news article pumping it up is another real possibility. So, I looked for an inverse ETF that followed the Chinese space in an inverse manner. Basically, if Chinese stocks went down, I wanted an ETF that would do the opposite and go up! (Much like $SQQQ, $SOXS, $TZA… those types of ETFs). I found $YANG ETF that did exactly this!
Art of Trading took an entry in $YANG on July 26th
Stop Loss: $12.50
As the trade developed each day, I tweeted Art of Trading with my observations:
Then on Friday July 29th $YANG gapped up more than 10%!
We used this gap up opportunity to book these awesome quick gains in $YANG!
This trade was good for 11.7% in 3 short trading days!
$YANG is a great example of a trade where “The best trades work right away”
· We spotted a setup in a sector!
· Identified a potential catalyst!
· Executed on the setup without hesitation!
· Booked great gains in a short time period!
I hope this trade review was helpful and informative.
Cheers and happy trading!
Art of Trading
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