New 78 Day High - Setting up Price Target - VIRT Simulation 02

This post is a copy of the email I sent out to the day trading students I handled.

Hello guys,

AUDC, TPNL, VIRT

Here is the latest recording of what we have covered earlier. We covered AUDC and TPNL ending up a simulation with VIRT.

SETTING TARGET PRICE 

Please try to remember the formula that I gave you in creating the Target Price

TP = ((PH - VL) * 3) + BC

Where:

TP = Target Price

PH = Previous High

VL = VCP Low or where the last congregation of support lies.

BC = Breakout Close

EXCEL FOR SETTING PROFIT AND LOSS TARGET

I created an excel spreadsheet on this formula which you can check from this link
http://bit.ly/Profit-Loss-Target-Calculator

All you have to do is plug in the data.

Of course you need to be the one to plug in also your stop loss and your price entry.

PRICE ENTRY SET-UP

Most of the time the price entry can be set based on the first red candle you see. Usually red candles would show tail and I would set an entry right at the mid section of the red tail. 

STOP LOSS SET-UP

Stop Loss can be set also to where the last support you could find especially on the a whole number. Any whole number that the breakout candle had broken becomes a new support. Let us say the breakout candle breaks out of price $25.00 and closing at 25.80. The 25.50 and $25.00 become very good support for the price to pullback to. If the price holds on to these levels, you can even add up your position especially if you are confident with the fundamentals of the stock.

PREVIOUS RESISTANCE TURNING SUPPORT

Previous resistance where double tops had formed and had been broken by that breakout candle becomes also the new support of the price to pullback to. Watch out AUDC's breaout from 12.82 where it made a gap up reaching a high of 15.70 last April 2, 2019. After the gap-up there were a lot of selling pressures but they were all dissipated upon reaching 12.82 support, which made some kind of a triple bottom. That triple bottom becomes your cue also of further rise in price. Thus when it broke the VCP 44D-22/7-5T, a huge breakout again occurred.

We used VIRT for our simulation trading only for around 20 days. You can see this game at this link.

http://bit.ly/N78VIRTSIM02

Notice that this game has a very huge breakout candle, just like TPNL. The pullback just congregated along a small range between the High and Low of the 1st red candle. Typically you will enter on the mid section of the tail of the red candle. This is done by issuing a buy within a period of time. And just wait for the stock to prove its action. Just like TPNL, Had you entered at 6.95 you already have a huge gain at 9.29 at current price. 

VCP ANATOMY

The VCP for TPNL was 35D-34/9-4T.

35D = 35 Days of VCP

-34 = -34% first contraction

-9 = -9% last contraction at the last touch close to the top hypotenuse side of the triangle.

4T = 4 times contractions

When a VCP reading contracts around  -9%, -7% or -5%. You have to be on high alert, because the price would certainly breakout on this particular range of contraction. The longer the VCP, the higher usually the breakout goes.

FISH HOOK PATTERN

I want you to notice also the kind of pattern this huge breakout creates. Both TPNL and VIRT showed some kind of a fish hook pattern. This kind of pattern is really very potent in long entries.

FUNDAMENTALS TO LOOK FOR

Continue to study the N78 Day High and start pondering on the charts. Look at them and investigate them using the otcmarkets.com, yahoo finance and finviz. A good PR, a good news on revenue, products, installation of new Officers as well as Insider Buy trading, Buy back of shares, Huge Financial Company buying shares or accumulating shares and FDA approval are your strong fundamental support to go long. Look for this clues as you investigate a New 78 Day High with a huge volume and a huge candle.

GAP-UP with HUGE TAIL PATTERN 

There are a lot of instances too that when a gap-up occurs accompanied with a hug volume but the candle formation formed a long wick, meaning huge selling pressure. The stock usually comes down easily but it will almost always come down to close the gap. Once the gap is closed, position on it and you will see that the stock will just sky rocket upward past the gap-up candle. I will show you some of these stocks later on.

For the time being, here is something to review for. 

 http://bit.ly/N78DayHigh-TargetSetup_VIRT02

Homework:

Give me a list of New 78 Day High stocks and tell me some of their fundamentals that would somehow give us the confidence to trade those stocks.

Cheers and have a good weekend guys.

Jerome