Matching Low candlestick swing trade – HOV

Found a solid swing trade candidate, HOV (Hovnanian Enterprises) to play for the upcoming week.  Probably will scale into this over the course of Monday, 7/23 /17 and Tuesday, 7/24/17.

  • First of all, this printed a Matching Low pattern, which I always like.
  • Stock is under the 10 day Exponential Moving Average, found an area of support

HOV-1

Look at that shaded area.  Since February 2017 up until recently in June 2017, this stock went back in forth in a relatively narrow trading range.  The longer the range the more meaningful it becomes…when it breaks higher or lower.  In this case, it broke higher, had a short retracement, then zoomed way higher!

Now look…it’s sold off quite a bit and in the last week, has settled back again to a level above that long prior tradking range.  Why the selloff?  Looks to have been in an industry (Homebuilding) that was recently downgraded by Barclays.  It wasn’t in list of stocks that Barclays downgraded, but obviously went down in sympathy.

I see this one going higher over the next week to two weeks.  Too much to like here:

  • Breakout of prior trading range – the people on the sidelines who watched HOV breakout after that trading range and were kicking themselves for not buying as it zoomed up are now getting their second chance.
  • The current price is also at a level of significant support (prior highs are now support)

HOV-2

Look at the longer term chart above.  Funny how the line of current support matches the prior high back in October 2016.

Also, look at the Fast Stochastics indicator on the chart below…

HOV-3

Every time it bounced around this level of the FAST STO, the stock didn’t hang around at those low levels for long.  Look at the shaded areas that line up the low FAST STO with the stock price.  Bounced around for maybe 1 week, 1.5 weeks at most and then…the stock price moved higher.

So here we are…at the same situation again with the low FAST STO.  I take that, along with the other factors I listed above and I’m in on this one.  Looking for a up to that intermediate high before the big bounce of around 2.70.  That’s a bit less than a 10% gain, for very little risk.

Setting a tight stop on this one and will scale into it over the next 2 days.

I posted a video on this matching low candlestick pattern reversal here.

Good luck!

 

Greedy Goblin

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