Peep the Slope on $SNAP – September 7, 2021SNAP
This is Scott with your Chart of the Day. I want to take a look at Snapchat ( NYSE: SNAP ). Snapchat ( NYSE: SNAP ) had a nice big earnings gap up here in July. And ever since then it’s just kind of been going sideways. We have this nice month and a half long base of sideways consolidation around its 8-day and its 21-day exponential period moving averages.
Now, as a swing trader, those are some of the key moving averages that I use to make my trading decisions. As you can see we had this little bit of a downside reversal day. It ran up, sellers came in and pushed it back down to the 8-day. It fell below the 21-day but then came back up and recently has just kind of been going sideways.
I can draw a trendline from this rejection day here and it’s pretty close to where we ended the day today, So we have this clearly defined level of resistance on this downward sloping trendline, here, here, here and we are right under that level today.
What I want to see from Snapchat ( NYSE: SNAP ) is a move through that downward sloping trendline coming on volume. So I would probably want to have an alert on Snapchat ( NYSE: SNAP ) right around 77.50. And I would want to watch for a volume thrust through that level.
Now, in terms of risk management, as I said, I like to use the 8 and 21-day exponential period moving averages so I would probably want the stock to hold above and close above that 72.90 level. If I am buying up here I am kind of risking about 6 percent so I probably wouldn’t want to go full size on the initial breakout.
As you know, in this market, a lot of breakouts have been failing or have been retested. So if we do get a nice break we could potentially see a natural reaction back down to the moving averages before follow through to the upside. So you would only really want to size in on that follow through to the upside. Or, if we can make a new high above this high here, that level is at around $81.00. Make sure and keep an eye on it, maybe add it to your watch list too.