In today’s trading world, especially with shortened trading weeks, it is essential to adjust strategies and mindset. Short weeks bring challenges like reduced volume and liquidity, which can affect market movements.
As a result, shifting from longer-term swing trades to faster-paced intraday swing trades can be more effective. Today, we will explore three swing trading setups that offer clear entry and exit strategies, along with specific trade plans to make the most of these opportunities.
1. Microsoft (MSFT) – Higher Time Frame Setup
Perhaps the most interesting setup of the week has been Microsoft (MSFT), which has made a steady multi-day recovery following a breakdown. Here is the trade plan:
Entry Signal: Seek a breakout above the $376 level, which will be the main resistance point following last week’s pivot high. Ideally, a breakout should occur with strong volume and a time above this level.
Set a stop at the low of the day on entry into position intraday.
First Target is a move to $380 at which you expect to cover most of your position.
Trailing Stop: Let the price push further up, so trail your stop using higher lows from the hourly chart.
Set your alerts at $376, and you will be ready for this breakout. If the price consolidates at this level, keep an eye on it for the next few days. If the trade goes as planned, try to hold on for up to three days for further momentum.
2. AFRM (Affirm) – Lower Time Frame Setup
Next, I talk about AFRM as Affirm where we react to a key trend break on a shorter time frame:
Trend Break: We are focusing in on a clean uptrend, and once that uptrend is broken, we’re looking to short the stock.
Entry Signal: If Affirm breaks the uptrend on the hourly chart and holds below that, I will short the stock vs. the high of the day.
Target: The target is a move towards the $46 level.
Stop Loss: As the price moves toward the target, trail the stop using the 15-minute chart to track lower highs or use the intraday VWAP.
Overnight Position: If the stock closes weak near $46 or lower, consider holding the position overnight for another day of continuation, provided you’ve locked in profit by covering half of your position.
This is a very quick reaction time with clear risk management as you monitor the trade’s progress and change your stops appropriately.
3. Mullen (MULN) & GameStop (GMBL) – Reverse Split Setup
Lastly, Mullen (MULN) and GameStop (GMBL) present opportunities from their recent reverse stock splits that can result in price action volatility:
Mullen (MULN):
Entry Signal: Watch for a push into the $10.50–$11 range. These are levels of supply and previous breakdown points.
Higher Resistance: If the stock does not fail here, then look for a further advance into the region of $12 area or to the 3-day VWAP at $13.40.
Short Setup: When the price is seen to fail here as per resistance (as confirmed by a lower high), short.
Cover Half of Position: Look to cover half of your position near Friday’s low around $9 and trail the remainder of your position down for a multi-day swing trade.
GameStop (GMBL):
Entry Trigger: For GameStop, resistance at $7.50–$8 could bring the stock price into a short.
Shorting Setup: Sell the shares and place the stop above intraday high.
Covering: Cover half of your position in the low $6 range. Continue to trail the stop for the remainder of the position if the stock remains in a downtrend, with all pops getting sold.
Both these stocks suffer from reverse splits and any manner of potential dilution, which creates opportunities for shorting. You can extract maximum benefit from such setups using supply and resistance points by closely monitoring such levels.
Conclusion
In a shortened week, volume and liquidity may decrease, making it essential to adjust your strategy. These three proven swing trading setups offer high potential for profit by focusing on key levels, trends, and precise entries and exits. Whether trading Microsoft for a longer multi-day swing, AFRM for quick intraday movements, or Mullen and GameStop for short opportunities based on reverse splits, each strategy relies on clear levels of support and resistance.
Remember that during shortened trading weeks, the liquidity can be very unpredictable. Get your mindset prepared and geared for faster-paced trades, and be ready for any possible market volatility. Remember to keep proper stop levels and profit-taking strategies. Happy trading and good luck this week!