New 78 Day High - Gap-up on Big Volume - ARWR Simulation

New 78 Day High - Gap-up on Big Volume - ARWR Simulation May 9, 2018

This is a simulation of the New 78 Day High which happened last May 9, 2018 with ARWR.
The following are Rules to follow in order to play this New 78 Day High.

1. Price had broken out of 200EMA (Exponential Moving Average)
2. Price Retested 200EMA.
3. Made 2 Previous High Break-out
4. The New 78 Day High is the Break-out on the 3rd Previous High.
5. 200EMA is on uptrend
6. 50EMA becomes the support upward
7. Volume of New 78 Day High is more than double than any volume of the last 30 days.

In our example ARWR:

1. Had broken 200EMA on Aug 24, 2017, after 15 days of reporting a Revenue growth of 23,846% from 39K of 2016 to 9.3M in 2018.
2. Price retested the 200EMA on Dec. 13, 2017 1 day after reporting a Revenue growth of 19,620%.
3. Made 2 previous break-out before May 9, 2018.
   Jan. 3, 2018 broke $4.50 H1 high.
   Mar. 5, 2018 broke $6.50 H2 high.
4. The break-out of May 9, 2018 is the break-out from $7.99 H3 high.
5. The 200EMA from Aug 24, 2017 break-out had been trending upward to May 9, 2018.
6. The price pullbacks of ARWR had been supported by 50EMA all the way up.
7. Volume of New 78 Day High is more than double than any volume of the last 30 days.

ARWR TRADINGVIEW 1 YR CHART with Target Price

SETTING THE TARGET PRICE WHEN ENTERING THE TRADE:
We use the following formula to set our Target Price:
TP = (( PH - VL ) * 3 ) + BC
Where:

• TP = Target Price
• PH = Previous High
• VL = VCP Low
• VCP = Volatility Contraction Pattern (Triangular contraction of Price)
• BC = Break-out Close

Based from the chart we can substitute the values in our formula:

TP = (( 8.00 - 6.50 ) * 3 ) + 9.00

TP = $13.50

Our Target Price is set to $13.50. As you can see the target is hit. But what we usually do as well other than just setting the target is how to scale out the trade such that going up you place money into your pocket. Also, when the plan does not materialize, what is our Stop Loss so we can exit taking a loss and move to another trade.

SETTING ENTRY TARGET:

Based on the fundamentals of the stock, the previous highs created by ARWR were actually accompanied with very strong revenue jump. 

1. ARWR had broken 200EMA on Aug 24, 2017, after 15 days of reporting a Revenue growth of 23,846% from 39K of 2016 to 9.3M in 2018.
2. Its Price retested the 200EMA on Dec. 13, 2017 1 day after reporting a Revenue growth of 19,620%. Then after that retest it jumped 

These 2 fundamentals gave us the confidence other than the technical set-up that give us the New 78 Day High. And to set our entry, we just need to follow the 1st red day from the moment of break-out. On the 4th day, May 14, 2018 after the break-out we had a red candle. This is the first pull-back. What usually happens, this red candle becomes the price point for entry. You can take the mid-body of that candle as your entry. Buy shares on this price level within probably 4 weeks time. And just wait for it to get hit. Sometimes, the hit happens right away and you are in. In this case the mid-body is $9.69 or $9.70. 

SCALING OUT YOUR TRADE:

Once you are in the trade, make sure to scale out. Plan to take some money off from the table. If our Target is $13.50. You can scale out at 10.00, 11.00, 12.00 or 13.00. These are whole number resistance and support. If you have a small amount of shares purchased, just let it ride. If you bought a lot of shares, make sure to take money from the table.

STOP LOSS

Never work on the trade without a planned stop loss. It's nice to have a hard stop loss, but the downside of this is that Market Maker sees all these stop loss orders and will always try to take them out. Thus, the better strategy is to set it mentally. And if the plan does not materialize exit based on your mental stop loss. In this case our Stop Loss with our entry at 9.70 would be 9.45 or if you can stretch it to 8.00 which was the whole number break-out. Try to limit your losses within 5-7% out of your total trade. That's why it is important to enter on pullbacks because you are sure that you entered at a quite lower price level that entering when it is skyrocketing.

ACCOMPANYING VIDEO LESSON USING Accelotrade for simulation on ARWR.

http://bit.ly/N78-GapUp-BigVolume-ARWR

ARWR TRADINGVIEW 1 YR CHART hitting Target Price

ARWR TRADINGVIEW 1 YR CHART from Target Price to huge drop

 ARWR TRADINGVIEW 1 YR CHART with pulling back to 200EMA

ARWR FROM STOCKFETCHER.COM 1 YR CHART - Revival Pattern

ARWR FROM STOCKFETCHER.COM 1YR CHART - New 78 Day High