Josh Brown sells Nvidia stock, anticipating a drop

Table of Contents

1. Introduction
2. Adding to the Position
3. Analyzing the Hourly Chart
4. Observations from the Daily Chart
5. Managing Risk
6. Anticipating Price Movements
7. Waiting for Confirmation
8. Ideal Scenario
9. Uncertainty with the Retracement
10. Developing a Plan

📈 Article

Introduction

Welcome back to Bars and Sticks, fellow traders! In this NV video, I'll be discussing my recent trading activities and sharing my analysis of the charts. Today, I had the opportunity to add to my position and make some profitable moves. Let's dive into the details.

Adding to the Position

This morning, as the market moved up, I seized the chance to increase my position. The real Game-changer came when a significant downward bar appeared. It was during this bar that I decided to add to my position progressively, taking advantage of the price drops along the way. This allowed me to Collect profits on subsequent bars, resulting in a productive session.

Analyzing the Hourly Chart

Now, let's shift our focus to the hourly chart. As I observed, the price has caught up with the 20-period moving average, indicating a critical juncture. The recent move higher, followed by a retrace and a failed attempt to breach prior highs, highlights an interesting situation. Additionally, there is a gap that needs attention. These factors will influence my next move. If the price rises and fails at the highs, it could signal a potential opportunity. However, if it surges above the highs and holds, I might consider exiting the trade. Such a break with sustained strength would mean a break-even situation for me.

Observations from the Daily Chart

Taking a look at the daily chart, I still see significant room for my trade to play out. There's ample downward potential from the current level. However, it's important to note that with each passing day, the moving average rises, reducing the gap between my average price and the moving average. This implies that my reward potential diminishes gradually as time progresses. Additionally, there's been a retracement that reached 50% of the previous loss. This retracement introduces an element of uncertainty that warrants close monitoring.

Managing Risk

To effectively manage risk, I have set specific criteria that will dictate my actions. If the price reaches a certain level and shows strength by closing above a high, I will exit the trade without incurring any loss. On the other HAND, my ideal scenario involves a continuation of the downward move, accompanied by the moving average catching up. A bounce upward would be expected but followed by a subsequent failure and a move below the 20-period moving average on the daily chart.

Anticipating Price Movements

Based on my analysis, I anticipate a potential bounce higher followed by a failure and a continuation of the downward trend. However, it remains uncertain whether the market will unfold according to this projection. Therefore, I will closely monitor the smaller time frame and look for confirmation in the form of the price moving higher, finding resistance, and then moving back down. This sequence, coupled with the moving average curling over, would Present an optimal opportunity for a short position.

Waiting for Confirmation

As a trader, it is crucial to wait for confirmation before making any significant moves. The market is full of surprises, and jumping the gun without proper confirmation can lead to losses. Therefore, I will patiently observe the price action and key levels before initiating any trades.

Ideal Scenario

In an ideal scenario, I would like to see the price move down below a specific low, hold, and then make a failed attempt to retest the prior high. Additionally, I would like to witness the moving average curving over as a confirmation of the downtrend. This combination would validate my analysis and provide an ideal setup for entering a short position.

Uncertainty with the Retracement

The retracement observed on the daily chart introduces an element of uncertainty. While it filled the gap, the price retraced 50% of the previous loss, leading to conflicting signals. I will closely monitor the price action to gauge the market's intentions and adjust my strategy accordingly.

Developing a Plan

In conclusion, I have outlined my plan based on the available information and analysis. As a trader, it is crucial to have a well-defined plan that considers various scenarios and risk management techniques. By patiently waiting for confirmation and being adaptable to changing market dynamics, I aim to navigate the markets successfully.

Thank you for watching this video, and as always, I welcome your thoughts and opinions. Trading is a continuous learning process, and I value the insights and experiences shared by the trading community.

Highlights

• Adding to the position during an upward move and capitalizing on subsequent downward bars
• Analyzing the hourly chart to identify critical levels and gaps
• Observations from the daily chart and the reduction of reward potential over time
• Implementing risk management strategies to exit trades without losses
• Anticipating price movements and waiting for confirmation before taking action
• An ideal scenario involving a bounce, failure to break prior highs, and a continuation of the downtrend
• The uncertainty introduced by the retracement and its impact on the trade
• Developing a well-defined plan to adapt to changing market dynamics

FAQ

Q: How do you manage risk in your trades? A: I have specific criteria that determine when I exit a trade to minimize losses. If the price reaches a certain level and shows strength, I will exit without a loss.

Q: What is your ideal scenario for entering a short position? A: Ideally, I would like to see the price move down, hold below a specific low, make a failed attempt to retest prior highs, and witness the moving average curving over to confirm the downtrend.

Q: How do you anticipate price movements? A: By closely monitoring key levels and looking for confirmation in the form of price resistance, moving average movements, and sequential price action, I can anticipate potential price movements.