The Dow Jones Index broke down this week and is now at its 50day MA. It has to close above 12200pts in order to prove it has strength.
How to trade this set-up? See DDM (bull ETF) which tracks the Dow Jones Index. It is a short at current levels accordingly to the Ichimoko Cloud system as the blue tenkan line has already cut the red Kijun line giving a weak sell signal as the price actions are still on top of the clouds.
For my style of trading, i will first determine my stop loss point which will be placed at the blue spot on chart below. Both stop loss price are my recommended spot to place your stop loss depending on whether you want a tight or loose stop.
How to enter your trade? For me, if i want to short sell 1000 shares of DDM, i will always average into my position while taking reference from my stop loss point as i may sometimes be too early or late to a trade. E.g. I may short 400 shares at current level, and then short 300 shares more a higher price WITHOUT violating my stop loss point. And if the price action is moving down, i am equally comfortable in shorting the remaining 300 shares at a lower price. In this way, i can build up my short position for this trade as i believe that we are at a short term top at current levels. Notice the high volume on the big red breakdown from the triangle.
For my style of trading, i will first determine my stop loss point which will be placed at the blue spot on chart below. Both stop loss price are my recommended spot to place your stop loss depending on whether you want a tight or loose stop.
How to enter your trade? For me, if i want to short sell 1000 shares of DDM, i will always average into my position while taking reference from my stop loss point as i may sometimes be too early or late to a trade. E.g. I may short 400 shares at current level, and then short 300 shares more a higher price WITHOUT violating my stop loss point. And if the price action is moving down, i am equally comfortable in shorting the remaining 300 shares at a lower price. In this way, i can build up my short position for this trade as i believe that we are at a short term top at current levels. Notice the high volume on the big red breakdown from the triangle.
How to exit? For traders hitting for target to ext, $55 looks like a reasonable target. Ichimoko trading system do not have a target exit price, instead its depend on the tenkan or kijun line for your exit, which may give back more profits as it is a trend trading system. Trend trading system will only attempt to catch the meat of the move which means giving back the bottom and top 20% or 80% of the move.
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