Swing Trade - Long AMTD Entry: 17.94 Stop: 17.25 Target: Open

Today’s trade was inspired by an article on Blain Reinkensmeyer’s blog, www.stocktradingtogo.com. The piece is entitled “Warning: Bullish Engulfments Can Make You Big Profits.” It’s a good introduction to a profitable candlestick pattern. Blain also provides some actual examples which is appreciated.

I figured I would spend some time searching for a tradeable bullish engulfing pattern and post it here. Fortunately, I didn’t have to look long. www.stockcharts.com has many free scans, including multiple candlestick pattern scans. I found tonight’s trade here.

AMTD has formed a bullish engulfing pattern. Moving in AMTD’s favor you have the 200 day SMA and 20 day SMA. Although the price has broken the 200SMA level, I treat support and resistance more as zones then exact numbers. So in my experience the 200 day SMA will still provide support.

The negative I see at this time is AMTD will need to get past its 50 day SMA. Also the market trend is down, so trading this one might be a little bit like spitting into the wind. It looks like the NASDAQ could rally, but I think it would be a few days before we see the NAS continue to the upside.

As far as my strategy goes for AMTD, I will be trading small and any upside move will need to be confirmed with good volume. My target is also open. This means to close my position, I’ll use trailing stops. Happy Trading!

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