Nike has broken through overhead resistance to new highs on weekly and daily time frames. The move comes after the fourth knock on the 79-80 door. Corrections take place in one of two ways – through price (declines) or through time (sideways price consolidation). This bullish continuation pattern in NKE is a classic ascending triangle, meaning that price formed this pattern during a period of consolidation within an uptrend. In an ascending triangle, one trendline is drawn horizontally at a level that has historically prevented the price from heading higher (for NKE, 79-80), while the second trendline connects a series of increasing troughs (marked with a “360 green” line). What’s great about patterns is that our risk and rewards are well defined. In this case, our reward target is 96ish, a 17% gain. And we can choose one of two stop loss levels to manage risk – either 79.50 (below previous weekly resistance now turned support) or tighter at 80.75 (the ideal support level on a daily basis)
We have our entry (right now), our stop loss, and our target. We don’t enter a trade without an exit plan. So we have our game plan and will enter this trade because of the robust risk/reward opportunity. If we get stopped out, we don’t care. That means our risk management is solid. We’ve removed the emotion while identifying great potential gains. You’re welcome.