ACE Ltd is now creating a new bullish trade setup. After nice run up in previous month the stock created new 52-day year high price and now is pulling back to 50 day and 200 day moving averages. It is in 50% retracement zone and it would be expected that the stock bounces back up.
There are two potential scenarios:
1) the stock will bounce back from those two moving averages or support line at 64 and it will continue back up, at least to a resistance at $70 level, which was shortly broken at the end of October and the beginning of November.
2) the stock will not sustain its levels on 50 day MA or support at 64 and continues lower.
If the scenario #2 occurs, I will discard this stock and will not trade it.
If the scenario #1 occurs and the stock closes above 50 day MA and shows reversal in a couple of upcoming days I can consider this stock as a good bullish trade and I will most likely open this trade. If so, I will be buying call options with a potential of later adjustment into a spread.
Another similar bullish setups:
ONB
PII
WAB
KLAC
I do not have any bearish potential trades at this time.
Happy Trading!
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