Don’t believe what you see with your eyes…
While technically in an uptrend, Royal Caribbean Cruises Ltd. (RCL) has recently broken a long term upward channel support line on August 1st, 2024 on decreasing momentum/relative strength:
Price rebounded off a long-term 200-day moving average and has worked its way back up to the prior support line, potentially acting as new resistance.
(Often at these rebounding/potential resistance areas, institutions will again sell into the recent strength)
This area also coincides with a previous 38.2% Fibonacci Level and slightly below the round 150 “psychological” trading number above.
The Momentum/RSI indicator is still below the midpoint/50 level and looks to be leveling off.
On a relative comparison of RCL vs the S&P 500, RCL appears to be stalling as well:
From a macro perspective, the general thinking is the consumer may be pulling back temporarily on more expensive discretionary luxury/travel in the near term, with some economic/geopolitical uncertainty looming.
With that being said, we think upward price momentum has been waning and at the very least more “choppy”/price consolidation conditions in the near term at these levels.
Also, considering the recent market volatility, we have proposed in the chat room a bear call spread “structured trade” which allows us to profit if the stock consolidates, goes down, or even slightly upward.
Here’s the trade setup:
RCL – October 175/180 Bear Call – Credit .85 per contract
- We have an eye on the round “160” price level above, coinciding with a prior 23.6% Fibonacci Line and should price pop back up into the prior upward rising channel as risk areas to watch.
- The profit target for this structured “trade” will be 30-50% reduction in the credit premium received (.59 -.42).
- The stop loss will be a doubling of credit received ($1.70) with a time stop of 14 days.
You like this trade setup?
We’re handing out setups as clear as this every week inside our Inner Circle.
We’re staying on top of trend changes and setting up trades to take advantage of them!
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Happy Trading!
