Currently watching TSLA because of the hype over Q3 earnings (to be announced).
About this setup:
- Investment horizon: Medium term (i.e 2 weeks to a month).
- Timeframe: Daily chart
- Strategy used for backtesting: Mean Reversion (ATR) Strategy
Idea: Using Price by Volume Histogram to find current support. Also, we want to mimic the initial point of entry signalled by the Mean Reversion (ATR) Strategy algorithm.
Scenario: Price is currently 843; should have entered at 733 following the algorithm. It's too late now, but still waiting to enter the trade.
Setup:
Using the built-in volume profile tool, set the range starting from the hypothetical point of entry (Sept. 20) extending it up to the current bar (Oct. 15). The red line is the POC developed over time. In theory, it approximates the moving average of price weighted by volume. This arguably provides more meaningful information compared to simple/exponential moving averages because (a) it takes volume into account, and (b) and it sticks to the defined fixed range of period drawn on chart.
Other points to note:
- 70% of the price distribution is between 762-816 (non-transparent area of histogram); price is currently above, so we assume TSLA is overbought.
- the discrepancy between current price and red line is due to lack of volume. If more buyers come in, the histogram will be skewed upward (actually to the left, if looking from correct side), and the red line (POC) will also rise up.
- POC has been horizontal at 780 since period of consolidation that began on Sept 28. We define this as the area of support.
- POC stands for "point of control", it's the longest bar of the histogram.
Stage 1: Do nothing. Just wait.
Stage 2: Enter at area of support.
- Scenario 1: later, if price rises to 860 (i.e as per 12month target price set by analysts at Goldman) => Tighten your trailing stop loss and/or start taking profits.
- Scenario 2: later, if hits stoploss placed below area of support during a selloff => Accept the loss, wouldn't be surprised if we revisit prior supports ranging between 680-720
Other notes:
- there are at least 8 analysts covering TSLA; their targets range between 120 to 1200. (Source: NASDAQ ER summary) We used GS's 860.
- this is not an investment advice, it's just a thought process
About this setup:
- Investment horizon: Medium term (i.e 2 weeks to a month).
- Timeframe: Daily chart
- Strategy used for backtesting: Mean Reversion (ATR) Strategy
Idea: Using Price by Volume Histogram to find current support. Also, we want to mimic the initial point of entry signalled by the Mean Reversion (ATR) Strategy algorithm.
Scenario: Price is currently 843; should have entered at 733 following the algorithm. It's too late now, but still waiting to enter the trade.
Setup:
Using the built-in volume profile tool, set the range starting from the hypothetical point of entry (Sept. 20) extending it up to the current bar (Oct. 15). The red line is the POC developed over time. In theory, it approximates the moving average of price weighted by volume. This arguably provides more meaningful information compared to simple/exponential moving averages because (a) it takes volume into account, and (b) and it sticks to the defined fixed range of period drawn on chart.
Other points to note:
- 70% of the price distribution is between 762-816 (non-transparent area of histogram); price is currently above, so we assume TSLA is overbought.
- the discrepancy between current price and red line is due to lack of volume. If more buyers come in, the histogram will be skewed upward (actually to the left, if looking from correct side), and the red line (POC) will also rise up.
- POC has been horizontal at 780 since period of consolidation that began on Sept 28. We define this as the area of support.
- POC stands for "point of control", it's the longest bar of the histogram.
Stage 1: Do nothing. Just wait.
Stage 2: Enter at area of support.
- Scenario 1: later, if price rises to 860 (i.e as per 12month target price set by analysts at Goldman) => Tighten your trailing stop loss and/or start taking profits.
- Scenario 2: later, if hits stoploss placed below area of support during a selloff => Accept the loss, wouldn't be surprised if we revisit prior supports ranging between 680-720
Other notes:
- there are at least 8 analysts covering TSLA; their targets range between 120 to 1200. (Source: NASDAQ ER summary) We used GS's 860.
- this is not an investment advice, it's just a thought process
