Time to Run or Roll Over - Trading DKNG and PYPL
Plus, keeping your trading simple and the chart for QQQ.
Keeping trading simple and effective is the only way to do this long term.
That is my opinion of course, but it is based on a lot of experience. Trading is exciting and easily one of my favorite things to do. And frankly, it is fairly simple.
That does not mean it is easy. But it is easier than you think.
I would guess that something like 90% of trading failures come from overthinking, overcomplicating, and overtrading.
The antidote is simplicity. And it starts with understanding what to look for in the charts you review.
This week’s trade ideas could not be any simpler.
But first, let’s take a look at the daily candles for QQQ. It is a little concerning but let’s not complicate things. What do you see here?
Here is a list of what I see, and why it is easier to be bearish here than it is to be bullish for the Qs.
Recent death cross formation (50-day simple moving average [SMA] diving below the 200-day SMA)
Failure to overtake recent highs, instead rolling over to close the week.
Prior support from 200-day SMA is now providing resistance (twice already).
It sounds very doom and gloomy but here is the way I like to look at it. We are at a very basic, binary spot. There are two ways this is likely to go.
Either QQQ breaks out and above the recent highs and finally touches 500 again, signaling strength and potential for follow through to the upside.
Or QQQ fails to move above 494 and instead seeks out lower price levels, possibly back to the 440-450 range.
This week should give us our answers early. And the names we are trading should follow in line with the direction of QQQ but with the potential for bigger gains.
First up is another favorite, DraftKings (DKNG).
DKNG
This candles for DKNG are really trying to paint a clear picture for us. The key level to watch is 36.37. It is even easy to remember.
DKNG closed at 36.15 on Friday and is either going to struggle to get above and stay above 36.37 or it will blast through and look for continued upside.
To me, this actually looks similar to the dip last August which was followed by buyers pushing the price from 30 to 41 in a month and then further to 53.61 before coming back down to current levels.
The volatility is there for big gains and I like the swing trade we have set up.
PYPL
The second name we are looking to trade this week is PYPL. This one is also pretty straightforward.
The key level here is 71.66 and with the candles tightening up as they reach resistance, it is likely they will either break out with force or reject soundly.
Either way, the trade will become clear and we will do what we can to capitalize in either direction.
I have updated the ATE Trade Ideas Tracker with the options contracts, profit targets, stop loss levels, and both bull and bear trades.
Here is the complete trading plan for both.
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