11/2/2022
Let’s get into that pattern that I mentioned earlier this week.
Now, look, I took great pleasure in coming up with today’s subject line…
And when you get it, I’ll assume you smirked and nodded.
Jokes aside, the chart we’re checking today has some potential after being shorted to death…
This company is an electric vehicle developer that de-SPACed a while ago, so you know it’s been destroyed ever since.
We’re looking at Faraday Future Intelligent Electric Inc. (FFIE):
The reason being is that I wanted to get a close-up look on how the pattern looks in terms of daily volatility.
Don’t let the talking heads of financial media tell you wrong, volatility is where the profits are.
So, what exactly is that?
Top left.
V + “Cup”.
Now, the bottom of the cup varies, hence the dotted white lines…
You don’t necessarily want to put on a position in the V, but if you can get in around the time the “cup” begins forming a leg to the upside, it’s not a bad deal.
And that’s what we’ve got here on FFIE…
Okay, back to the price action.
There are several parts worth noting and I’ve boxed them all in…
These are areas of consolidation which you see in the vast majority of trend reversals, but they’re part of a broader model.
Notice how there’s a state of equilibrium to the left, a drop to test liquidity, and then an immediate impulse to the upside…
…all before coming back to the middle.
Over the last year, we’ve seen this a hundred times, but sometimes we don’t know what we’re seeing.
How this works is it breaks above a previous short-term high and retraces.
Ideally, we look to buy in around the 50-61.8% “Fib Pocket”, although recent volatility could widen that entry area for a lower entry… Just check out the Fibonacci Extension I’ve drawn in and you’ll see what I mean.
The deal with this chart is this: I want to see it retest that entry area more than once.
Why? It’s easy to get lured into being hopeful and thinking the trend has changed.
You can check higher time frames, but I’m looking at the Alpha Waves tool that Chris Hood and I lean on in TRADECOMMAND.
That’s the second indicator on the lower chart which is an early-detection momentum array and, if you look closely, is bleeding red with the composite Stochastic heading lower… But it can only go so low.
In fact, this tool already told us that the momentum was heading lower yesterday morning when you look at the shift from neon green to dark green and then, of course, red.
As for price, it may be lower, but contrast that with where the Stochastic was when Eve formed after Adam lost a rib.
My assumption here would be another test around the 61.8% with potential consolidation…
Watch closely.
Keep moving,
(Disclosure: I am long FFIEW.)
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.
