XERO (XRO: ASX) - A SHORT TERM SPECULATIVE TRADE
Hello!
Apologies it has been a while since I've posted. That is because in my previous post in October 2018 (please see here), I concluded that we were in a bear market and thus I was solely looking for short positions. Unfortunately after many months of attempting to get shorting permission from my broker, I have not been able to short stocks due to "technical difficulties", and am still trying to sort this out. A little bit salty since I had some really great trades planned out (the market
dropped another 10% after), which sadly
never materialised.
Anyways, that is the reason I have not placed a single trade since October last year.
Let's not dwell on the past , and jump straight into my most recent technical trade, XRO: ASX.
First of all the ASX200 is showing signs of recovery, although it is still a little early to tell for sure.
It seems to be forming a small head and shoulders pattern towards the end of 2018 and has broke through the neckline, signalling a reversal. Of course a pullback to the neckline is ideal however price seems to have found support at 5780. Price has also broken above the previously respected 40 EMA. Although this could be a false breakout, price is above the McGinley Dynamic and with the next resistance level at the 200 EMA and 5940, there is still enough upside to play with for now. I AM NOT SAYING THE BEAR MARKET IS OVER YET.
Now onto the XRO chart.
It seems to have formed a triple bottom and has pulled back above the 200EMA. Pulled back and rejected the 200EMA earlier this month and is now showing signs that it is respecting the 50 EMA. Although there is resistance around 44.70, I have entered due to the support found on the 50 EMA (which price tested and rejected), and that it has closed above the McGinley again. Although it may find resistance at 44.70 and go lower, with my entry price and a trailing stop loss, I believe there is a good chance of at least breaking even.
Entry price inc commissions: 43.11, stop loss at 41.50. Starting risk on trade = 4%. Total portfolio risk = 0.5%.
Although the trade is a little riskier than I would usually take - hence "speculative" (I usually like the pullback to the EMA clearer and 50 to be above the 200), I think this is a decent setup (and I am bored of waiting on the sidelines).
Cheers,
Howard
Update 21/01/2019
The XJO has formed a wedge pattern with a bearish pinbar rejecting the 200 EMA. Not a great sign, but we will see how this trade goes, whether the market rejects the 200. If it does, back to looking for shorts (if my broker is able to fix their problem).
Howard.
Update 22/01/2019
XJO has formed a bearish candle showing rejection of the 200 EMA. If a close below the McGinley then the market may be heading downwards again, not great for this trade. But, we will wait to see what happens.
Update 24/01/2019
Bearish descending triangle formed on the XRO stock chart, but I've already entered, there isn't a lot of risk plus it hasn't made a new low yet. Not looking great but I'll stay in until it hits my stop loss.
Update 25/01/2019
XJO broke out of bearish wedge but found support at a higher low (bullish). Testing the 200 EMA.
Update 30/01/2019
Stopped out. After factoring in commissions. The total loss on this trade was 4.5%.
RESULT
Loss of 4.5%.
Apologies it has been a while since I've posted. That is because in my previous post in October 2018 (please see here), I concluded that we were in a bear market and thus I was solely looking for short positions. Unfortunately after many months of attempting to get shorting permission from my broker, I have not been able to short stocks due to "technical difficulties", and am still trying to sort this out. A little bit salty since I had some really great trades planned out (the market
never materialised.
Anyways, that is the reason I have not placed a single trade since October last year.
Let's not dwell on the past , and jump straight into my most recent technical trade, XRO: ASX.
Disclaimer: I am not a financial advisor and the following are my opinions only.
First of all the ASX200 is showing signs of recovery, although it is still a little early to tell for sure.
It seems to be forming a small head and shoulders pattern towards the end of 2018 and has broke through the neckline, signalling a reversal. Of course a pullback to the neckline is ideal however price seems to have found support at 5780. Price has also broken above the previously respected 40 EMA. Although this could be a false breakout, price is above the McGinley Dynamic and with the next resistance level at the 200 EMA and 5940, there is still enough upside to play with for now. I AM NOT SAYING THE BEAR MARKET IS OVER YET.
Now onto the XRO chart.
It seems to have formed a triple bottom and has pulled back above the 200EMA. Pulled back and rejected the 200EMA earlier this month and is now showing signs that it is respecting the 50 EMA. Although there is resistance around 44.70, I have entered due to the support found on the 50 EMA (which price tested and rejected), and that it has closed above the McGinley again. Although it may find resistance at 44.70 and go lower, with my entry price and a trailing stop loss, I believe there is a good chance of at least breaking even.
Entry price inc commissions: 43.11, stop loss at 41.50. Starting risk on trade = 4%. Total portfolio risk = 0.5%.
Although the trade is a little riskier than I would usually take - hence "speculative" (I usually like the pullback to the EMA clearer and 50 to be above the 200), I think this is a decent setup (and I am bored of waiting on the sidelines).
Cheers,
Howard
Update 21/01/2019
The XJO has formed a wedge pattern with a bearish pinbar rejecting the 200 EMA. Not a great sign, but we will see how this trade goes, whether the market rejects the 200. If it does, back to looking for shorts (if my broker is able to fix their problem).
Howard.
Update 22/01/2019
XJO has formed a bearish candle showing rejection of the 200 EMA. If a close below the McGinley then the market may be heading downwards again, not great for this trade. But, we will wait to see what happens.
Update 24/01/2019
Bearish descending triangle formed on the XRO stock chart, but I've already entered, there isn't a lot of risk plus it hasn't made a new low yet. Not looking great but I'll stay in until it hits my stop loss.
Update 25/01/2019
XJO broke out of bearish wedge but found support at a higher low (bullish). Testing the 200 EMA.
Update 30/01/2019
Stopped out. After factoring in commissions. The total loss on this trade was 4.5%.
RESULT
Loss of 4.5%.
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