At TheSteadyTrader.com we trade in multiple time-frames, meaning we take advantage of opportunities in the near-term, mid-term, and longer-term time-frames. While that means that we have trades and investments on in different stocks and ETFs, it can also mean having multiple open trades in the same underlying security at any given time.
Today I looked at U.S. Steel (X) and found a stock that sets up as a long-term buy, but in the short term offers us good risk/reward for a short:
On the weekly chart we see a narrowing trading range that has been in the works for the better part of the past 2.5 years. Note how the 200 week moving average (red line) has served as good support in 2010. I am looking for X to break to upside of the narrowing range (dotted blue lines) in the longer-term (bucket 3 as we call it) time-frame – 4 weeks to 6 months.
On the daily chart the picture is different and it looks like the stock wants to re-test the bottom of the narrowing trading range, which also coincides with the 200 day moving average (red line). More specifically the 50 day moving average (yellow line) served as resistance earlier this week. That resistance point around $57/58 is also the 50% Fibonacci retracement level from the highs on February 18 to the lows on March 10. One of my better trading setups dictates this shorter-term pattern could see the price of X towards $50.
As a longer-term trend we are currently happy owning X stock but are taking advantage of a short-term trading opportunity with put options.
If this type of trading and investing style is appealing to you I would be happy to welcome you as a member at WWW.THESTEADYTRADER.COM