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Written by Edward Chen
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Monday, 01 October 2007 |
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A price action play for a stock in trading range would be to go long at support and short when nearing its resistance. And changing the direction (i.e. buying at support should be changed to shorting when price falls below support) of the trade when either is broken with anticipation of further movement.
RVBD (Riverbed Technologies Inc.) seems to be trading sideways (in trading range) within approximately 10 to 12 points (38 to approximately 50 per share). Should it go below $40, it will likely be able to find support for another up wave at approximately the 37-38 area. Thus, making a chance to short until 38 when below 40. With its current volatility, the options pricing are bound to be signficantly profitable when entering the trade at the support or resistance. This is not a trade for the fainted heart and stop losses must be kept tight according to price action trading rules plus the positions must be monitored live during market hours. |
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Last Updated ( Tuesday, 02 October 2007 )
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