Perfect Pullbacks and Beautiful Breakouts for NVDA
Tue, Dec 27, 12:11 PM ET, by Corey Rosenbloom
We’ve had NVIDIA (NVDA) on our trading radar for quite some time because it has consistently been a “strong stock getting stronger.”
Our core trading philosophy at Afraid to Trade is that trends – once established – have greater odds of continuing than of reversing.
We love trading – and teaching pullback strategies – on stocks like NVIDIA while the trends persist.
As you’ll see, NVIDIA’s (NVDA) trend persisted a lot longer than many traders thought it could.
However, let’s focus now on the strategies and now the “Angles of Ascension” (what’s that?) for NVDA.
We’ll start with the Daily Chart:
It’s far better to trade WITH the trend as opposed to trading AGAINST it.
That’s the focus of my presentation at the upcoming Traders Expo in New York City in late February.
As you’ll see on the Weekly Chart, NVIDA resumed its uptrend with a breakout event in May on HUGE volume.
A series of pullbacks (retracements) from July to present helped add money to your trading account if you were brave enough to attempt them.
Here’s how we identify trending stocks and trade them via our Perfect Pullback Method.
What’s most important right now is the increased price momentum on lower relative volume.
That’s a bit concerning and suggests another pullback may be brewing for early 2017.
Here’s the increased acceleration of the trend and the “angular momentum” trendlines on the weekly chart:
There’s a fine balance in trading trends – which tend to persist – and protecting yourself from sudden reversals, especially in stocks that are “going parabolic” or vertical.
NVIDIA (NVDA) is a stock that is reaching “parabolic” status as seen above with the blue trendlines.
The concept of “angular momentum” as seen by angular or rising (adaptive) trendlines suggests that we adjust our trendines to meet the rise in velocity of a powerful trend.
The final point of the powerful price move comes in the form of a “blow-off top” or break through of a rising VERTICAL trendline which is what is developing at the moment.
Be careful if trading this stock as climactic moves – high volatility – tend to burn both sides of the market.
Focus on the current pattern, the lessons from the pullbacks in the “strong stock strengthening,” and watch what happens next.
Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade
Corey's book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).”
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SDI Glossary: "Trend" Definition
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