|
Darryl Nagel Telstra has certainly been a challenge for investors. It also has provided wonderful opportunities for Safety in the Market traders. One such trade is the recent short opportunity following the confirmation of double tops. Refer to page 122 of the latest version of the ‘Smarter Starter Pack' for a revision of David Bowden's discussion of trading double tops and double bottoms.
The chart below shows Telstra reaching 200% of the range between the tops and the valley on 2 September.
Telstra Chart 1
click chart for more detail
Traders would enter this trade on 4 August when the stock falls to $5.01, being one cent below the first swing low after the confirmation of the double top.
The initial stop loss is placed at $5.10 being one cent above the high of the bar forming the said swing low. Progressive stops are placed one cent above each successive swing high.
Telstra Chart 2
click chart for more detail
Profit is taken either when Telstra reaches the said 200% level at $4.63 or when the price retraces to one cent above the immediately preceding swing high.
Telstra share CFDs provide traders with excellent leverage to take full advantage of this short trade. Several ASX stocks are now ripe for the formation and confirmation of double tops.
Happy hunting!
Darryl Nagel
|