Royal Mail Stock Price Trend Reversal – Trading Journal

12/10/14 – The price for this Royal Mail Stock is interestingly around the IPO original listing price of 400.00 from exactly a year ago (yellow hatched horizontal line).  The recent Bearish Trend has found support around this level at the Wave 3 low, then hit the target level for the Wave 5  and despite the very negative week last week in the FTSE the price has held around the 400.00 level and not returned to the Wave 5 low level. As with other potential Trend Reversal trades it is important to look back at the previous trend and in particular how the Wave 4 performed. With this Royal Mail Stock the Wave 4 on this previous Bearish Trend behaved as expected, finding resistance at the Fibonacci 0.382 retracement level taken between Wave 2 and Wave 3 and meeting the Elliott Oscillator requirements for the pull back.  The 6/4 Moving Average High is within the Trend Channel o the Trend Channel is the most conservative exit point point for my entry strategy.  I have decided to place my Stop Buy Order @ 410.10 which is out of the Trend Channel for Monday’s bar position and above the high of the bar on the 01/10/14 when the price attempted to break the bearish trend after the Wave 5 low. The Stop Loss is placed below the Support level @ 383.00 with the initial Take profit Limit order at the previous Trends Wave 4 price @ 456.90, which gives a Risk to reward profile of just over my minimum required 1:1.6 for this potential trend reversal trade on the Royal Mail Stock.  As this Royal Mail Stock has only been listed for 12 months and this is the first end of a natural Bearish cycle/trend then there is a lower probability of this trend reversing due to no past data to this stocks behavior.  All I can go by is that the stock has found support at a predicted Wave 5 Level, my normal trade setup indicators are good with 6/8 in the green and the IPO price seems to be holding as a support level at the moment.  This is a first for me on a young stock like this, but I must never be afraid of first or I would never enter trades! Charts as Below.

royal mail stock

royal mail stock

15/10/14 – This Royal mail stock price was gathering momentum during yesterday’s session getting ready to trigger my main trade on the Daily time frame.  I also noticed that a “Cup & Handle” chart pattern was forming on my 5 minute scalping time frame.  After the handle started taking shape I decided on a quick scalp above the high of the candle forming the back lip of the cup rather than the tighter entry out of the handle trend line resistance.  The more conservative entry was triggered @ 404.236 at around 10.20 am.  Then 45 minutes later my take profit limit order was taken out, giving a profit of 1.6% on my trading account balance.  This was on the way to trigger the main main trade which is discussed above.  the chart for this scalp trade is below.

royal mail stock

15/10/14 – After the strong scalping trade mentioned below my main trade setup on the Royal Mail Stock Long Trend Reversal Trade.  This was a high volume move into the trade and give me confidence that the momentum is building for this potential Trend Reversal trade.  I am already at the “Risk Free” stage on this trade due to the  scalp trade made during this high volume bullish move today and now will look for other scalps to turbo boost the main trade, but only on high momentum days.  Chart Below for the entry of this Long trade on the Royal Mail Stock.

royal mail stock

15/10/14 – Royal Mail Stock trade – Getting a little carried away with the both the success scalp going into the trade and the trade triggering I attempted a second scalp on the same day.  This was weak setup as the ascending triangle had only tested the resistance once before the trigger and I didn’t listen to my own advice in that “two points make a line and three ore more make a trend line or support/resistance line”.  I must cal down with the scalping and be more disciplined .  A 1% loss on my trading account balance with this trade, but overall still Net 0.6% profit as the scalp earlier today hit my target.  Chart as Below

RMG-LON scalp#2

16/10/14 – Royal Mail Stock trade – Another strong volume and momentum day for the main trade on the Daily time frame that triggered yesterday. A third scalp on this trade with initially a strong Falling wedge forming (two yellow lines forming wedge) which had met the minimum requirement of of four touches/tests, after which time i was looking for a suitable entry on this strong Bullish break out indicator.  I decided on a conservative @ 403 which was way out of the falling wedge, the bearish trend channel and above the high of the  spinning top Doji formed at 10.30 am.  The trade triggered and then went range bound for the next hour or so forming a now common cup and handle pattern for this Royal Mail Stock on a 5 minute time frame.  This gave some confidence that a break was still on the cards.  Eventually a break up occurred at 14.35 but then an exhaustion Doji formed and so I quickly adjusted a trailing stop to 406.40 to protect profits.  The next bar took me out of the trade for a profit of 0.7% on my trading account balance, once again putting the main trade in  Risk free situation as the NET profit for my 3 scalps so far stands at 1.3% on my trading account balance.  This was very quick trailing stop movement and occurred during one of my new live trading room sessions.  Chart as below

royal mail stock

17/10/14 – Royal Mail Stock trade – Scalp number 4 on this trade was a leisurely Friday trade. At 10:55 am (GMT)  a Wave 4 extreme was formed which caught my attention but I needed more for a scalp trade. At 11:45 am the start of a potential Double Bottom was formed with the Stochastic having crossed over and about to exit the Over Sold Zone. I elected on a Stop Buy order aggressively above the Trough of the Double Bottom @422.50 with the Stop Loss Below the Double Bottom lows @419.40.  The Charts Below show the progression of Trailing Stop Adjustments until I was finally taken out the trade at 14:40 pm giving a 1.3% profit on my trading account balance.  This Scalp on the Royal Mail Stock was very leisurely and I had time to adjust and take screen shots of each move, which is very unusual for Scalping. Charts are in reverse order with the top chart showing the Trailing Stop being taken out to take profit.

royal mail stock

RMG-LON SCALP#4#4

RMG-LON SCALP#4#3

rmg-LON SCALP#4#2

RMD-LON scalp#4#1

22/10/14 – The Price for this Royal Mail Stock opened and closed today above the 50% to the initial target zone of the previous Bearish Trends Wave 4 High. I Have adjusted the Take Profit Limit Order to 480.00 and also adjusted the Stop Loss to become a Trailing Stop @ 413.20.  This Trailing Stop now puts the main trade at “Risk Free” and I will look to adjust to protect profits after seeing how the price action goes for the rest of the week.  The resistance level coming up from the Previous Bearish Trend Wave 4 High is an important level to break through to give an indication that a Trend Reversal is truly a possibility.  There was a day on day increase in volume for this Bullish movement so the signs are looking good for tomorrow to continue this momentum. Chart as Below.

royal mail stock

07/11/14 – The main Trend Reversal Long Trade on the Royal Mail Stock has had a good session today forming a new Wave 3 and testing the resistance level at 470.00.  The week overall for this trade has been spent gathering Bullish momentum after the previous weeks pull back, this has been sustained into the close with higher volumes each day combined with higher highs and higher lows each day (volume sub chart below main chart and stochastic).  The Trend Line Support (white Trend Line) has also gathered strength and meaning which could be a good support level moving forward in this trend reversal trade, providing guidance to trailing stop placements.  It is also worth noting that a False Bar has also appeared at the top of the Stochastic Sub Chart indicating that the Royal Mail Stock is in fact in a Bullish Trend.  I have decided to still remain conservative with my trailing stop adjustment until the price breaks through the resistance level at 470.00.  The Trailing stop is placed @ 424.19 which is below the recent pull back from the first attempt at the resistance level which found support at the Fib 0.5 level taken between the Wave 2 and the high before pull back. I have also adjusted the the Take Profit Limit order to the next resistance level and is set @ 510.00.  Chart as Below highlights the adjustments and Observations for this Long Trade on the Royal Mail Stock.

royal mail stock

RMG-LOn#8 volume

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12/11/14 – This Royal Mail Stock is going through another contraction phase this week with lower volumes each day and looks like it will test the Trend Line support again.  I have decided to adjust the Trailing Stop up to 438.00 which locks in 1% profit on my trading account balance.  This conservative adjustment is still way below the Trend Line Support and below the lows of the last 4 bars (trading days), allowing the trade room to do its thing.  I will wit to see the price action and behaviour of this Royal Mail stock over the next day or so before deciding on the next move.  Chart s Below.

royal mail stock

14/11/14 – Another Successful Scalp trade on this Royal Mail Stock. About an hour after today’s session had opened a strong Bullish Engulfing candle stick pattern occurred on the 5 minute time frame for the Royal Mail Stock.  My secondary indicator used in this setup was the MACD Histogram crossing the from through the zero line from -ve to +ve territory.  This was also a longer term Wave 4 pull back on the 5 minute time frame so I put in the Fibonacci retracement between Wave 2 and Wave 3 extremes and could see the low formed at the same time as the Bullish Engulfing pattern did find support at the Fibonacci 0.5 retracement level, giving further strength to this setup.  I decided on placing the Sop Buy order just above the The Fibonacci 0.382 retracement level @466.80 and the Stop Loss was just below the Fibonacci 0.5 retracement level which did act as support previously.  The Take Profit Limit Order was set @ 469.40, giving the standard Risk to reward Profile of 1:1.6 for my stock scalping strategy.  At 09.35 am the trade triggered and then as usual with this stock it took its merry old time with low volume to finally take out the Take Profit Limit order at 13.25 pm, giving a 1.6% profit on my trading account balance.  This rend reversal trade on the Royal Mail Stock, combined with the Scalping trades is turning into my most profitable trade of 2014.  Chart as below.

royal mail stock

15/11/14 – The resistance level at 470.00 for this Royal Mail Stock Trend Reversal Trade was proving too much at the end of last week to push through with lower volumes seen in Friday’s session. I have adjusted the Trailing Stop to 452.95 which is way below the Trend Line Support for Monday’s bar position and below the lows of the last 6 bars (trading days).  This slightly more aggressive adjustment still allows the trade room for another attempt through the resistance level but locks in a decent 1.55% profit on my trading account balance.  I f the price hasn’t got the moment to break through next week there is a chance it will become bearish on a wave 4 pull back and I do not want to ride a second pull back during this Trend Reversal trade on the Royal Mail Stock.  I would rather take the profit at my trailing stop and take another potion after a Wave 4 has completed, if it does! Obviously next weeks price action is crucial for the future of this trade.  Chart as below.

royal mail stock

18/11/14 – A New Wave 3 High was formed today on this Trend Reversal movement of the Royal Mail Stock.  Today’s bar was in the green and strong all day and then in the last 30 minutes of the session the price fell sharply to test the Trend Line Support level and close the session lower than the open to form a Doji.  This indicates the Sellers really got hold and took over at the end of the session and the current bullish movement may have ran out of Juice at the resistance level. But this could be in preparation for tomorrow as the Half Yearly Results are announced 1 hour before the session opens in the morning.   At the same time last year the results were good and the price gapped up on open and momentum  continued higher.  However there is a possibility of a gap down if the results are poor which gives me a  difficult choice to make regarding the position of the Trailing Stop. I have adjusted the Trailing Stop to 458.50, which is below the lows of the last four bars (days), way below the Trend Line Support for tomorrows bar position and should give a decent gap between the closing price of today and any potential gap down.  This locks in 1.75% profit on my trading account balance which when combined with my scalping activities makes this  great trade so far.  If the price does gap down or break the trend line support and take me out of the trade, then it is fair to say a wave 4 pull back may be in process and I do not want to be part of that. There may always be another opportunity to trade the 5th wave after a Wave 4 pull back.  I have had reasonable success with the scalps on this trade as well, so overall it is one of my best trades so far in 2014  so I am very happy with the progress so far and will not be down if my trailing stop gets taken out tomorrow.  Chart as Below.

royal mail stock

19/11/14 – The Half year results for the Royal Mail Stock were as expected but the forecast wasn’t very good.  The Market gapped up on open so I was safe to adjust my Trailing Stop up to 465.40 to lock in 2% on my trading account balance whilst giving the trade a slim chance to work to move higher.  I do suspect that once the market has fully digested the announcement that it will sell off, hence the aggressive adjustment of the Trailing Stop after open. I did email all subscribers quickly to communicate my quick decision.  Chart as Below.

royal mail stock

19/11/14 – My Trailing Stop on the Royal Mail Stock Trend Reversal trade has been taken out about 45 minutes after adjusting it, giving a 2% profit on my trading account balance.  As I suspected the market has sold off dramatically after digesting the news in the Half Year Results and forecast for the Royal Mail Stock.  I will now track the price action for the rest of this week and into next week to see if this pull back meets my criteria for a Wave 5 trade.  Overall this has been a great trade as the total profits for all the Scalp trades and the main trade total a fantastic 6.2% profit on my trading account balance, making this my most successful trade for 2014.  Chart as Below.

royal mail stock

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paul.bratby@hotmail.com'

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