Swing traders in this fast-paced world of trading always seek setups promising considerable price movement and potential profits.
Whether you are an experienced trader or a newcomer, these three proven setups can be of significant benefit in finding profitable opportunities in massive directional moves. Here are three actionable setups: entry and exit points, stop levels, and targets. We’ll look at the first setup.
1. SMCI (Super Micro Computer)
The Setup:
SMCI jumped nicely last Friday on news that the company will likely beat past guidance for Q2 results. This set off a breakout from a multi-month base, taking the stock to new all-time highs. Momentum carried over into Friday and was impressive.
Swing Trade:
Aim to get into a continuation of the momentum play instead of a top chase, and the price already ran from some point high so going in when the stock price had already hit highs meant taking excessive risk. Looking to wait on the pullback so that getting into the better-priced entry with it dropping to an ideal level below 2-day VWAP specifically around $400–$410.
Entry Strategy:
The secret to this trade is finding a higher low confirmation on the pullback. If the stock gaps up significantly and pulls back to the $420-$425 zone, then forming a higher low above Friday’s high would indicate that the uptrend is well with two’s up. At this point in the article, entry may be made, with the stop placed below the low of the higher low.
Target Levels:
If the trade goes as expected, then the first target will be close to Friday’s high, $450. If the stock maintains strength, then it could push higher, giving the trader the ability to take profit in a longer trend.
2. MARA (Marathon Digital Holdings)
The Setup:
MARA, a Bitcoin-related stock, saw a significant reversal candle on its daily chart, coinciding with Bitcoin bouncing off the $40K level. The strength in Bitcoin suggests that MARA could also experience a multi-day bounce. This setup is particularly sensitive to Bitcoin’s price action, so it is essential to monitor Bitcoin’s movements closely for this strategy to be effective.
Swing Trade Plan:
In this trade, the strategy will be to buy the dips, and the entry will be based on the 2-day VWAP. Since Bitcoin is still holding its support in the $40K–$41K zone and is still looking strong, MARA should catch up. It would be great to get in at a pullback level, perhaps at $15.50, once the stock is showing strength and buyers are starting to come in.
Risk Management:
As with any swing trade, there has to be risk management. A time stop will be used if MARA fails to hold the multi-day VWAP. Should the stock spend some time below the VWAP, this means that a breakdown could be forming, and traders should exit the position.
Target Levels:
The first target for this setup would be $18, where the stock could encounter some resistance. If the move continues to unfold, a more ambitious target of $20 is possible, as this is an important level from the daily chart. However, this target requires sustained strength in Bitcoin and continued positive momentum in MARA.
3. PHUN (Phunware)
The Setup:
PHUN has been incredibly volatile, especially considering it did two offerings in the same week. Despite the dilution, the stock closed up more than 200% by the end of the week. This is incredibly interesting to traders wanting to play a short squeeze, as the stock remains elevated on a short-term basis, as many swing shorts still hold the position, betting that it will move to lower levels.
Swing Trade Plan:
For this setup, the goal is to wait for a potential push higher in PHUN. If the stock rises toward $0.30, this could trigger panic among short sellers and entice more long positions, fueling further upward movement. The ideal scenario is a move past $0.30, where shorts may begin to cover, creating a short squeeze and driving the price up to $0.35–$0.40.
Entry Strategy:
Once PHUN approaches the $0.30 level and demonstrates further strength, traders should prepare for a breakout move. Here, volume will be key: look for a rise in volume as the price rises, signaling that the move could continue. If this happens, it will be best to enter the trade around $0.30–$0.35.
Risk Management:
There would be a tight stop on this setup. The stop should be placed either at the high of the day or the high of the exhaust move because the price will reverse after it has exhausted all its upward moves. This setup is speculative and therefore needs careful risk management to ensure that if the trade does not materialize in the way the trader expects it to, he or she gets out with no further losses.
Target Levels:
The first target for this trade would be the $0.35–$0.40 range, where the stock could face resistance. If the short squeeze scenario plays out as anticipated, this could lead to a more significant move, allowing traders to profit from the upward momentum. However, this setup requires careful monitoring, as the price action can be unpredictable due to the volatility of PHUN.
Conclusion
These three setups—SMCI, MARA, and PHUN—are excellent opportunities for swing traders looking to capture significant price movements. Using clear entry and exit strategies, monitoring the markets for key price levels, and using good risk management techniques can position a trader for success.
The critical takeaway from these setups is the confirmation of the trend and not chasing the market at its highs. That really helps to perfect your swing trade results: combining patience and discipline in waiting for optimal entries along with a thoughtful trade plan, always remember managing risk well while being prepared for changes in strategy if market conditions change.