Shoprite(SHP)-BULLISH DIVERGENCE TRADE

Weekly Chart analysis

A bullish divergence is when the price and the oscillator diverge. The price makes lower lows but the oscillator is making higher lows. Its a reversal pattern. 

 

When you find a reversal pattern on a time frame higher than the one you are trading, signal a stronger bias change.

Daily Chart analysis

This Divergence on the weekly chart being bullish, I then look for a long entry on the daily chart.

On 8 September 2020, we had a huge gap, on great results from the company.

Triggering the trade and confirmed by breaking through and closing above the Daily resistance.

 

I will enter a market open on the morning of 9 September 2020. Using the close price of 8 September 2020 2X ATR to place a stop loss.

 

Trade mechanics (using the closing price on 8 September 2020).

 

 Entry: R127.69

ATR: R3

Stop loss: R127.69 – R6 = 121.69

Risk: R6

Account Balance: 2926

Max risk: 2% R58.52

Share quanity: R58.52 / R6 = 9.7 (rounded to off ) 10 shares.

 

My entry could be different from the plan 

 

Exit plan.

 

Exiting is one of the things I am struggling with, in trying to let my winners run. For this trade wil

Since I will buy 10 shares here how I will exit the position if it works in my favor.

 

  • Sell 3 shares at 151 
  • Another 3 shares at 200
  • I will ride out the last 4 to 200



Tradingview chart

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