Stock Trade of the Week : Jan 3, 2014 Six time frame Ichimoku Buy PB, Prosperity Bancshares Inc.

On Dec 31, 2013, we received an Ichimoku 6 time frame buy email alert on the stock PB, Prosperity Bancshares Inc.  from www.ichimokutrade.com.     Here is the email alert:
Weekly_stock_jan3_2014_email
 
The email told us there was an opportunity to go long on the stock PB.   The blue arrow shows when the email alert was received.  After examining the 4h and the daily time frame, it didn’t seem like there really was a bullish opportunity.    The resistances were going lower and the support was constant.   Basically, the instrument was consolidating but the “ceiling was shrinking” which indicates it may start a bearish trend soon.    Twice, we have tested the support of 61.52.     If we close below 62.68 before breaking the resistance at 64.00, it will increase the probabilities of retesting the support and possible breaking it this time.
Due to this analysis, we are going to wait for price to get a break of the support and then setup a trade as shown in the chart below.   Due to the multiply time frame buy, the bullish traders can get caught going long and cause a major bearish trend.    The entry would be 62.68, initial stop of 62.96, and a preserve mode of 61.52.   This would give us a max risk of 0.28 and a min. reward of 1.16.    The min. reward/risk would be 4:1 i.e. 414%.
Weekly_stock_jan3_2014_chart
 
Price has closed below the support now.   As a result, we setup the trade as shown above.     If we break the support of 61.52 without pulling back to our entry level, we will cancel the trade since the trade is gone.
A LOT OF PEOPLE ASK US WHY WE DON’T TELL PEOPLE THE EXACT ENTRY.   THIS TRADE OF THE WEEK IS A PERFECT EXAMPLE WHY WE DON’T.    IT IS HARD TO PROGRAM EVERY POSSIBLE SCENARIO.    A COMPUTER WILL THINK THIS IS A PURE BEARISH TRADE SINCE ALL THE TIME FRAMES ARE SETUP BEARISH.   HOWEVER, A HUMAN MIND WOULD RECOGNIZE A PROBLEM GOING BEARISH.  ALSO, THEY WOULD RECOGNIZE THEY WOULD GET A BETTER REWARD/RISK TAKING A BULLISH TRADE AFTER THE “STOP RUN”.    THIS IS WHY OUR SIGNALS TELL YOU WHEN AN OPPORTUNITY EXISTS, NOT THE EXACT ENTRY.   IT ALLOWS THE TRADER TO LOOK AT ONLY POTENTIAL OPPORTUNITIES AND THEY USE THEIR MIND AND THEIR TRADING PLAN TO DETERMINE IF A TRADE REALLY EXISTS.   THIS IS HOW YOU GET A GOOD REWARD/RISK RATIO AND ALSO INCREASE YOUR PROBABILITY OF SUCCESS.
 
If you would like to learn how to trade like an institutional trader or learn more about our multi-timeframe email alerts, go to www.ichimokutrade.com or email us at info@eiicapital.com
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About the Author Manesh Patel