Hey, welcome everyone! It’s Robert Roy, founder of WealthBuildersHQ.com, and welcome to this edition of Trade With Rob which is for June 18, 2021. Hope you’re all having a fantastic day. Now, the markets have just closed up, so let’s first go ahead and take a look at what the market itself is doing here.
So, we had a wild day. We stretched down to this (blue) zone, and wound up back here. If we look – for those of you that are newer and have not seen this before, or very little – we’ve got a great Fib in there. We’ve got this 4181 level which is a Fib level, the 4200 level which is the 100-point, and the 4191 level which is the top of our Fibonacci. So, that’s where this blue zone of strength comes in, and we bounced off of this yesterday and today. We closed up slightly lower from than we did yesterday. We did have a bit of gain earlier in the day, but nothing that’s scaring me just yet, that I’m concerned of “the market’s flipping over.” Not yet. Doesn’t mean it’s not happening, we just not necessarily there at this point. So with that, the overall market is a bullish-neutral. In an ideal world, we’re looking for setups that move off of key levels that give us that give us the greatest amount of strength into our entries.
So, the one today is Alibaba (BABA). If we go ahead and look back at the entire Fibonacci so we can see where everything is, and we’ve had this one before, and we’ve done well every time we’ve done it.
Here’s the V-top, good strong move down. What a gap! And there’s our V-bottom. We stretched back up into this zone here. We actually had a nice setup for a Fibonacci 4-step trades in there. There was one in there, there’s another one in there, that one a little harder to take. And now, here we are on the right side of the chart, and let’s look at what happened today.
So, we made a pull to the upside, and we just made it to that 211.23 level. I’m looking at a rollover to the downside tomorrow. If we get that rollover, that’s where the entry is. Step number 1.
If it moves against us, we’ve got our stop right in here, which we’ll talk about in a moment.
Box 2 is our first target which is 203. You’re going to enter around 210. 203 is your first exit. 210/209, somewhere around there. But, 203 is your first exit; you’re going to exit half the trade there. Rob, what if I only have one contract? Then, you’re going to exit the whole trade. That’s what it’s all about, that would be your exit.
If you have multiple contracts, let’s say you have 10, you’d sell 5 at target 1. Target 2 is down here at 194.50. If you’re getting into this at 210, down to 194.50, you’re talking 15.50 move on the entire position. Very nice
Now, there’s a good possibility that we don’t get to the second exit, and that’s okay! What we do is, our stop is up here at 213. If we move our direction, once our first target is hit, we move our stop to just below breakeven – so, even if it comes back, turns against us, we still have profit from the first half of the trade. We might make a little bit, it might cost us a little bit, we might break even, but nothing puts us at a big risk in this trade setup at all.