LONG/SHORT LNKD: WHICH DO YOU PREFER?

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LNKD price action is now showing potential trading opportunities both long and short. The short scenario: The broader time frame is generally bullish but currently we are facing bearish momentum. This is a healthy retracement since it has not compromised any significant supports so far. Using Elliott Wave, I have counted 4 waves of a bearish impulse. This scenario offers a higher probability that we will see a Wave 5 completion before this stock shows any sign of reversal. For day traders and swing traders , the key is to locate an intraday short setup that validates in order to participate in the 5th Wave of this impulse. Looking for bearish price formations on 15 minute charts, or bearish candle reversal patterns on 60 - 240 minute charts can provide an entry opportunity with limited risk. This scenario can be helpful because it can help you anticipate bearish price action over the next few days. If you intend to swing trade this move, make sure to read my bullish scenario in order to understand the price target. (See Short Target Area on chart)


The Long Scenario: Once Wave 5 completes, we need to see where. There are a number of potential support zones between 206 and 202 areas, the 197.50 area and 192 area. Extreme Price Zone support refers to my particular setup that can result from a false breakout occurring as Wave 5 attempts to push new lows. This is one area to look for long validation. And just below that there is overlapping Fibonacci retracement support. The fact that we are trading above this area informs us that this is a healthy retracement and not overly bearish. The magnitude of this support area can make for a significant bullish reaction provided there is a strong broader market to support such a move. As a day trader watch these areas for bullish reversals and validation and be extremely cautious with shorts. As a swing trader, watch for the setup and validation near the extreme price zone. Since this stock is generally strong, the average target of 220.50 area (See Long Target Area on chart) is not unreasonable. Stops must be defined at the time of entry. The swing trade can take up to a week or more to play out and will require a strong broader market to support the move.

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