Stocks

Three Line Price Break stock pick: Coherent (COHR)

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Since picking Dolby and Arch Capital stocks for long trades, today Three Line Price Break trading system suggests short-selling Coherent stock in case COHR shares trade below yesterday’s low at $52.57. The signal includes a red candle printing a new 4-day low, following three green successive candles in the box chart.

cohr-daily-stock-chart

If the signal is confirmed by a new low and resistance level at $55.15 holds, maybe the 3-month uptrend will come to an end. $52-55 area has acted both as support and resistance level before for Coherent stock.

cohr-weekly-stock-chart

What could the future bring for COHR stock? Perhaps a downswing to $40 or a breakout to all-time high at $65. But that doesn’t really matter, since according to the strategy the stop loss should be placed at $55.20 protecting our capital and the profit target needs to be placed just at 2 times the length of the red candle, that is at $48.50. If traders sell short at $52.50, the reward-risk ratio of this trade comes down to 1.5 – 1. Of course we may scale out and only trade out half of the position at the first profit target, willing to gamble on a stronger downtrend.

Disclaimer: I’m long DLB, ACGL and plan to initiate a short entry at COHR within the next 48 hours.

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Jim began with card counting at blackjack tables, then moved to sports trading at betting exchanges, played online poker and ended up investing in US stock markets and forex. Nowadays he mostly writes than gamble or invest. Connect with Jim: StockTwits | TradingView