Chart Of The Day: China Sanctions Confirm Lockheed Martin’s Short-Term Top
Investing.com | Oct 28, 2020 01:45
Lockheed Martin (NYSE:LMT) ended a two-day rally, falling 1.5% after China said it will impose sanctions on the company and others over arm sales to Taiwan.
However, it’s unclear how much such a move can affect the aerospace and defense company, as 68% of China’s weapons come from Russia, with the remainder spread between France and Ukraine—not from Lockheed Martin.
If anything, Taiwan is the big buyer of Lockheed Martin products, with an over 30-year history as a customer. Moreover, this development is also part of the trade war between the US and China so we can reasonably expect the US to support the company.
So, while we don’t see any cause for a long-term impact on Lockheed Martin, traders may sell it in the short term as a knee-jerk reaction.
The 1.5% selloff yesterday confirmed the integrity of a complex H&S top neckline, demonstrating that the supply-demand flipped.
The RSI gave traders a heads up, having provided a negative divergence to the price, falling while the price was rising.
h2 Trading Strategies/h2Conservative traders are likely to wait for evidence that bear took over with the price clearing yesterday’s hammer low, on a closing basis, with a filter to avoid a bear trap, of at least 3 days below $362, preferably to include a weekend. Then, they’d wait for a retest that would find resistance, as the final confirmation of a downtrend in the short-term.
Moderate traders would be content with a close below $360 for two days then they too might wait for a return-move for a better entry, if not for additional bearish confirmation.
Aggressive traders may short now, or wait for the possible bounce after yesterday’s hammer, for an entry closer to the pattern’s presumed resistance.
Here’s an example:
h3 Trade Sample/h3- Entry: $375
- SL: $380
- Risk: $5
- Target: $350
- Reward: $25
- RRR: 1:5
Author's Note: This is a trade sample, which by definition means one approach, but like in anything else, there isn’t only one true way to approach this trade. The above sample is merely to reflect the necessary requirements for a basic, coherent plan. If you don’t have one that you’ll stick to, that reflects your timing, account, and temperament, you’re not trading. You’re gambling. Good trading!
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.