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Setup: FBF (Failed Breakout Failure)
Price: 60
Description
So this is one of the hottest stocks in the market. It’s IPO open was 25 and it’s now above 65. Not bad for a stock that’s only been around since June.
I want to be involved long but I don’t want to chase at these levels.
Instead, I think what we will see here is an “FBF” pattern.
This is where the stock breaks out but the breakout fails. This brings in a bunch of stops as the breakout buyers exit their positions… but instead of feeling any kind of downside followthrough the long term buyers step up again.
There’s two ways for this to go down. If the stock closes back above 67.50, I’ll buy some calls.
Ideally, the better setup would be a run and test of 60. Once it gets there I’ll drill down to shorter timeframes and look for evidence of buyers stepping up.
Weapon of choice is the Nov 70 call.
OK so the stock broke support on the open but failed to see followthrough. I’m expecting this to run here.
IWO Premium Order Ticket Type Asset Duration Strike C/P BTO TWLO 18 Nov 16 70 Call Total Debit: 4.4 Close under 61 gets me out.
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