Warrior Trading Blog

$TSLA for 10 Points! | Mike’s Trade Recap

All right. Good afternoon, everybody. I hope everyone had a really great Fourth of July holiday. We’re just getting back at it here on Thursday morning. I’m coming off of a holiday week. It’s kind of an odd time to have a holiday in the middle of the week, which we don’t see too often, and it definitely affects the trading.

 

But, I will say action was much, much better today than we had initially expected. We’re coming into a weekend after a holiday, we really got some good momentum in TESLA, and we captured pretty much all of it. It turned out to be a really great trade, so I want to take a few minutes here, break this down, and talk about what I saw in the pre-market as well as the technical levels that we traded off of.

Let’s take a look. Tesla over the last few days obviously has been seeing some selling, right? We’ve kind of pulled off this $360 level, it’s been a big pivot in the past. We’ve rejected here over the last several weeks and we’ve been pulling off of it here over the last few days after some negative news came out.

We’re now getting some continuation. What I liked about it here this morning is we were sitting at this $309 level, and below $309 it opened up to a pocket down to $297, just below $300. These candles right here where you break out of consolidation and have high volume, so you can see right here, this high volume bar, this volume coupled with this big range candle, these typically tend to be what I like to call a launchpad, or an ignition candle.

Those typically act as very strong support or resistance depending on which way they’re going. For instance, this candle to the downside will act as a lot of resistance, since it had a lot of volume, so we start to approach that level as high as this candle, there will definitely be significant resistance.

What I saw here today is on this ignition candle, where we took off from on high volume, that now is going to be the next level of support, which falls around $297.50. The reason I like to call it an ignition candle is because after that move takes place, look at the continuation you get after. Same thing over here on the downside. Ignition candle. We get that pull and then we get that continuation. Again, what I saw this morning was room from $309 down to $297.50, potentially all the way down to $292, if we really got some continuation to the sell side.

Another thing I liked too is that we were sitting back below its major moving averages, which normally always will bring in another wave of selling in this case since we’re below. What I saw in the pre-market here was we drifted down on Tuesday, we were sitting right above that $309 level and then this morning, we were coming in below the 100 day.

What that meant was now we’re back below all the major moving averages and we’re starting to approach that $309 pivot. What I said is that if I see this thing start to sell down below the 100 day, down through that $309 pivot, I’m definitely going to be very interested in this, because of the big pocket it has from $309 down to roughly $297.50, where that ignition candle began, and provided us that big support level on volume.

What happened out of the open was we started to see, we started to slice right through this 100 day moving average. I didn’t really want to anticipate this breakdown just because it was such a critical level and Tesla obviously can really whip around.

It can make it tough to get started, so I wanted to wait and see some continuation on this. If we dial into a faster time frame on the 15 second, which I use for entry, what I saw here is that sell down and then retest.

What do we always talk about when we’re looking for an entry, precision entries. We’re looking for a pivot in the direction we’re looking to trade, so we’re looking to trade to the short side.

We want to see a pivot be put into the short side. Here is the first move up, it’s starting to sell off. Remember, we’re not below the 100 day moving average, yet. You have to get below that and the $309 level.

What happened was, we started to get this sell off, it dipped below $309, I didn’t get in this yet, because I didn’t want to anticipate. Here’s the real first move back up. We started to reject that $310, $311. Come back in, test $309, come back up. Test the VWAP, still blow the 100.

This is the most important thing right here. It’s a lower high. A lower high against the VWAP and I started to get short in through here as we came back down at $309.80. $309.80, I was short, and I just sat in this thing and watched it very closely. Watched this 15 second timeframe to get a good read on the price action.

What I saw was lower highs every time. Lower highs, lower highs all the way through, and that kept us in this trade. If you’re looking at this from a price action standpoint, you can see there’s lower highs on every wave here, and that’s what should have kept you in the trade.

Every time we look at this thing, we’ve got lower highs. That should tell you to stay patient and remain in the trade. That’s what allowed us to cover this thing all the way down to $300. I wanted to see $300 and that’s where I was going to take my final piece. I didn’t hold any more longer than that just because of the week that we’re in.

We’re in a holiday week. We’re really lucky to see any sort of action or momentum. This Tesla trade really was a great one. I covered it all the way down through $300. My last out was $299.80, so a full 10 points from top to bottom, just an incredible trade. These are the types of trades that make your month.

One of these a week, every two weeks are really all you need to stay solvent. These are really fantastic moves. If you can identify these technicals and get these precision entries that we do here off of this 15 second chart, stay patient, you can really, really do well. That’s what we were able to do here today.

$309.80 entry, we covered half as we came down through $308. I covered more as we came down through $303. Then, that final piece I held as we broke through $300, and my bid was at $299.80.

Again, for a full 10 points. We just don’t see these types of moves that often. When you have the technical setup to back up a stock that has the ability to put in these wide range moves, you need to be on high alert and watch them very closely, because again these are the trades that make the big, big money.

The big wins. We were able to capitalize on this setup today and I know a lot of traders in our room were able to take advantage, as well.

Again, just point out the levels here in the pre-market. Sticking to the plan, being very precise on our entries, watching that price action very closely, and letting the trade work. Patience.

The money is made in the waiting. It’s really important not to get too involved in the trade. Once you’re able to pinpoint your entry and you’re in, sit back, let the trade work, and as long as the price action is in your favor, then you need to remain in the trade.

There was never an exit signal on this, all the way down until we had that volume bottom come in at $297, which happened right here. You can see the ramp in volume and the bottoming tail candle put in against the pivot, that is a really, really nice volume bottom.

You can see it came all the way back to highs, right back to the open. Those are really strong setups when you have those hard sell-offs into a major pivot and you have a volume ramp at the same time. Really, really important.

That’s a teachable technical moment right here is this volume bottom into a pivot. We had the same thing on Apple just the other day. Just so you can see, huge sell off here to the downside, major pivot at $183.50, volume ramp into the pivot. Stock is not going any lower as the volume is increasing, that’s telling you a volume bottom is coming.

You can see it held that $183.50 pivot to the penny and just sat off that low, and never traded any lower. But, that is just an incredible example of a volume bottom. Same thing on Tesla. Again, you have that volume ramp into a major pivot after an extension. Hammer candle, volume bottom. A lot of traders took this long after I covered my final position here.

They switched sides, they took it long and they got the same move back to the upside. When these stocks are making moves like this, these high-Beta names with great technical setups, you’ve got to take advantage, and we were there today to do that.

I hope you guys were able to take advantage, as well. Any questions, always feel free to reach out. [email protected]

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