05/04/2022
It’s a BIG day on The Street.
Today’s the second day of the FOMC meeting and traders will be eagerly awaiting Fed Chair Jerome Powell and the gang, starting around 2:00 PM EST…
…the classic “hurry up and wait.”
I know we all want to hop into bottom-of-the-barrel trades, but let’s try to be as patient as Pablo Escobar.
(Source: tenor.com)
But while we do that, it’s not a bad idea to scope out where the volume is.
I covered today’s subject last week, but I want to go over the back side of the trade so we can manage our expectations…
If you’ve been trading it, Redbox Entertainment Inc. (RDBX) has been a good one.
(Don’t sleep on the warrants!)
Okay, so we’re strictly on the hourly chart here. For short term traders, the hourly on down to the 5-minute time frames are good places to be.
This may look overly technical, but I assure you it’s far more simple than it appears.
Keep reading…
Locating shares to short is a bit tough right now and fees are expensive, so I’m skipping out on playing the back side…
Lower highs and lows = back side.
But intermittently, shorts will cover and bulls will rush in to get a piece of the action and FOMO buyers will inevitably buy the tops. It’s unfortunate, but someone has to do it.
RDBX may very well get another pop today after holding the $6.00 line (white arrows), which happens to be the bottom of the ATR Baseline (custom indicator courtesy of Chris Hood).
That’s the channel you see with the green background. A break below it and it’ll flip to red…
Now, the reason I say it could jump today is the Fibonacci Retracement. The white box highlighting the price action is my “Fib Pocket”.
Of course, this is the kind of pop that is typically short-lived.
Why? The gap in the Volume Profile which fits right in the Fib Pocket.
Look further down though to the lower chart.
Relative Volume is waning… RSI is falling… and the MACD histogram is below zero…
And then we have yet another custom indicator by Rogue’s Chris Hood called the Squeeze Trading Tool 1.0. The arrows are pointing to more downside and the histogram is also deep red…
It’s turning, sure, but it will be a bit.
As for the big picture: The patterns to the left can play out again on a larger scale if buyers come in.
For now, I’d watch for an area of support to develop close to the ~$5.00 area, similar to the previous setup (long white arrow to the 78.6% Fibonacci level).
Look for bullish volume and an expansion in the trading range to the upside…
We want BIG green candlesticks.
Keep moving,
(Disclosure: I hold no position in RDBX.)
This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.
