FL Stocks Swing Trading Idea – Short
The Wave5trade Elliott Wave Indicator suite for the NinjaTrader Platform has been used to put together this SHORT Stocks Swing Trading Idea on FL on the Weekly timeframe. As per the chart on the video below the overall bearish trend can be seen and the automated Elliott Wave count indicates the FL (Foot Locker) stock has pulled back against the main Bearish trend on a Wave 4. The wave5trade strategy involves trading the 5th Wave of the Elliott Wave sequence as it is the highest probability move in a “with trend” trade. The Wave 4 has pulled back and found initial resistance in the Amber Pullback zone, which indicates an 80% probability that the 5th Wave will go on and make a new low in this current bearish trend. The Pullback zones are part of our Elliott Wave Indicator Suite. We will discuss the remainder of the potential Short swing trading setup on FL below in the Video. The Setup figures for this potential Short are also below the video in this post.
There are quite a few elements that are included in our Elliott Wave Indicator Suite for the NinjaTrader NT8, Thinkorswim , TradeStation and MultiCharts Platforms. Lets discuss in order to build up the picture of this potential Short trading opportunity on FL.
- The Wave 4 pullback has found resistnce in the Amber Zone of our Specially programmed pullback zones to indicate an 80% probability of the 5th wave making a new low.
- The 5/35 Oscillator (included in our indicator suite) shows the Wave 4 pullback is between 90% and 140% of the highest point on the oscillator during the 3rd wave.
- The Stochastic still has cossed in the overbought zone so once this starts to exit the overbought zone we can say the overall Bearish trend is potentially back on.
- The Risk to Reward is 1:2.5 to the automated Target zone that our Elliott Wave Indicator Suite plots on the chart. So risking 1% of trading balance between stop loss and entry gives a potential reward of 2.5% into the target zone. The minimum Risk to Reward suggested when trading the 5th Wave is 1:1.6 so in this particular case we have a strong Risk to Reward into the target zone.
- The Entry strategy is developed using previous price action AND importantly below the 6/4 Moving Average Low (Red MA line on chart) which is also part of our Elliott Wave trading indicator suite.
So in this case we can see that we have a great deal of evidence that the Wave 4 has behaved as expected and we have a good risk to reward for the trade. This gives a high probability of success for a Short Trade on FL with the following entry, stop loss and target levels. We must be aware that the trade may not trigger this week but we are looking for a lower low and lower high on this weeks weekly candle to confirm more bearish momentum from the wave 4 resistance level. For those trading options also be aware that a weekly move like this could take anywhere from 6 to 15 weeks.
Short Entry for FL at $44.40, which is below previous support level on the 3rd and 4th waves and the 6/4 Moving Average Low for this weeks candle potision.
Stop Loss at $53.25 which is below the wave 4 low
Target Zone $20.00