Trade Idea: PANW
I am short-term NEUTRAL and long-term BEARISH on $Palo Alto Networks(PANW)$ at these levels.
Here's a look at its daily chart:
As you can see, the stock is putting in a descending triangle pattern on the daily chart, which is characterised by lower highs and the same lows. Currently, the stock is trading near the 139-140 area which is close to the gap from 124 to 139.
During today's session, the stock attempted to break into the gap but it bounced off 139.80s. This suggests that there are two possibilities for the stock in the coming days (which explains my neutrality in the short-term):
Possibility 1: The stock breaks below the 139-140 support level and gap fills to 120s. This signifies a breakdown of the descending triangle pattern.
Possibility 2: The stock bounces from the 139-140 support level and makes a move towards 150-160s to test the descending trend line of the triangle pattern. This suggests that the descending traingle continues to be in play until a breakout above the trend line or a break below the horizontal trend line into the gap fill.
So, how do we trade this? I personally would recommend a wait-and-see approach and to play the follow through rather than to guess. I would suggest taking PUTS if the stock closes within the gap fill territory (i.e. close below 139.50s) and taking CALLS if the stock manages to hold 140s and higher. However, if you are taking CALLS, I would suggest that you hedge with a small position of puts in case the stock decides to retest the 139-140 support level even before touching the upper trend line. If we do end up breaking below the triangle, then you can cut your calls and switch to puts. Good luck everyone!
If you enjoyed this post, then leave a like and/or a comment on my post and follow me for more of such posts!
@TigerWire @TigerStars @CaptainTiger
$QQQ(QQQ)$ $CrowdStrike Holdings, Inc.(CRWD)$ $Salesforce.com(CRM)$ $SPDR S&P 500 ETF Trust(SPY)$ $Apple(AAPL)$
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Moreover, the stock is putting in a potential head and shoulders pattern if you zoom out even more, and a breakdown should facilitate this pattern