How I found the stock to play
Some might argue that this is not so parabolic when looking at the smaller time frames. But the 60-min chart is pretty extended, so this still applies as a parabolic reversal for me.
What is more important, it went up to the previous resistance
If we look at the 60-min chart, it is not a probable event that any big candle is followed by a consolidation - thus a pullback is more probable than another continuation candle. Now it is about to find the right spot for the pullback.
Another factor was that the whole market was about to reverse as well, as it was going up for more than an hour.
One of the signals of losing steam were the smaller candles on the way up to the HOD.
Entry rules
I look for a reversal pattern combined with indicators.
I love to take reversals at times 1 minute after a 15 and 60-min cycle, making a fake break candle using my overlap rules. Therefore, I like to take them at 9:46 10:01 etc.
I chose the aggressive entry here. The stop loss is the break of HOD by one cent so 172.06, the entry was 171.99. A 7 cents stop on a $172 stock is very tight, but there is just no other stop on this chart. Even the less aggressive entry would be only like 5 cents more.
Trade management
As usually, I target
5R
VWAP
50% of the previous move
whichever comes first, but in this case with this small stop and my low buying power it made very little sense to target 5R which was 35 cents and I saw the bigger potential, so I stretched the range order to the price I eyeballed to be the future VWAP level and let it run. On my reversal plays I move my stop to break-even after a 1R move which I did, and it got never retested.
As it turned out, the stock moved to 169.53 an impressive 35R move.
Do you use level 2 market data a lot on these kind of trades?