A little over a month ago, I featured Corning Inc (NYSE: GLW) in an article about how to best use Bollinger Bands (BBs), an invaluable trade confirmation tool.
For those of you that missed it, we took a look at why BBs can be very helpful in identifying high probability trades, due to the fact that 90% of a stock’s movement will typically occur between the upper and lower BBs.
Here’s what GLW looked like back when we used BBs to confirm a long trade setup:
In the weekly candlestick chart above, you can see that GLW is a zig-zagging, BB-bouncing stock that has presented several great opportunities to go both long and short.
And now, four bars (and then some) after we set our trade trigger to go long at $31.00, here’s GLW’s current situation:
Over the last few weeks, GLW share prices soared. As it stands, we’re up over 7% above our trade trigger at $31.00 from early June.
But now, GLW is starting to reverse. Stochastics are sky-high (suggesting the stock is overbought) and more importantly, the current weekly candlestick is trading below the last two candle body lows (where they closed at).
Should GLW close out this current week (on Friday) below the last two candle bodies, setting a trigger to go short below the 3-bar low would make sense – especially with a narrowing wedge present.
As time goes on, GLW has shown that it likes to trade into a tighter and tighter range. Even though share prices haven’t hit the upper trend line, it appears as though the stock is ready to reverse when you consider the aforementioned conditions.
In fact, it wouldn’t surprise me at all to see another rapid-fire weekly trade that secures a healthy profit in the next two to three bars.
GLW’s done it before, and it certainly seems ready to do it again.
Even without the help of an upper Bollinger Band.