With a trade war in full swing and a president insistent on forcing China ever closer to the fire, finding profitable trades over the last few weeks hasn’t been an easy endeavor.
What seemed to be otherwise fantastic setups instantly crumbled – demolished by an ill-timed Trump tweet that sent equities spinning, only to be propped up yet again the very next day.
And some days started off with a “bang” as the market celebrated highly positive A.M. news, right before sinking by the end of the trading session as investors came to grips with what the morning headlines really meant.
Trends couldn’t develop naturally day-to-day, and as a result plenty of traders got burned in the process – looking for nuggets of gold in a see-sawing market.
In times like these, when sideways chop has reared its ugly head, I find it’s helpful to take a step back and “break free” from the daily candlestick charts.
And yes, I know what you’re thinking.
It can be difficult to get away from the excitement of 2-3 week-long (sometimes less) short-term trades. Almost all traders I know personally live and die by daily candlesticks (at least their portfolios do), and it’s become a huge part of their daily trading routine.
But by taking a different approach during times of volatility – like focusing on the weekly candlestick charts – you can still achieve great results while screening out much of the market’s “noise”.
With what’s been going on, I’d argue that there’s never been a better time in recent memory to make the switch to weekly candlesticks. So, with that in mind, I’ve found what looks like a promising trade in the works – one that I would’ve missed out on had I not gotten into the “weekly mindset”.
Nektar Therapeutics (NASDAQ: NKTR), as shown above, has worked itself into what’s called a descending triangle. It’s a well-known formation that’s used by traders to identify trends, and is marked by a sharply descending upper trendline (or “slope”) opposite a more flat bottom trendline (or “run” for you mathematicians out there).
Even with all the trade war shenanigans over the last week and a half, NKTR looks ready for a breakout to either the upside OR downside should its price action move the stock past one of the trendlines.
And based on the recent setting of a higher low in April (compared to the lower low set in December of 2018), NKTR might be gearing up for a major run to its January 2019 highs.
So long as investors show that they can stomach continued trade tensions.
If not, a downside breakout would present an arguably even better trade, as the closest level of key support lingers at around $25.50, set all the way back in 2017. Because it was established so long ago, the psychological price point might not even hold if encountered. From there, NKTR could enter free-fall territory.
So, as May comes to a close and we push on into the warmer months, keep an eye on NKTR’s movement. When (not if) it hits a breakout scenario, there could be a nice opportunity for traders waiting to scoop up some post-tariff gains.