Last Friday’s note highlighted the exit on our daily swing trade in Axsome Therapeutics Inc. (AXSM) but there have been some interesting developments with the stock since then and a few clients have been rewarded for their keen attention and quick reflexes, states Ian Murphy of MurphyTrading.com.
If you recall, we entered the tall reversal bar (arrow) when the required signals for the FBD Strategy were present. But, due to the height of the price bar, a protective stop placed 0.5ATR below the low of the bar would have been so far away from the entry price that the risk-to-reward ratio would not make sense, so I suggested placing the stop at a 50% retrace of the bar (red dashed line). Then on Thursday, we closed below that stop, so we were out.
However, the stock printed another washout reversal bar on Friday and a few nimble clients re-entered the position. On Monday AXSM found support right on the original 50% retrace line and yesterday it popped skywards taking out the first target. The risk-to-reward ratio was much better the second time around and a stop could have been placed below the low of the trigger bar. The original signals worked but the stock decided to have a shallow pullback before taking off.
The price is now pushing against overhead resistance created by the gap down in June (circles) and the 1ATR line where it failed in July (dashed arrow), so I suggest banking at least ⅓ of the position now if you haven’t done so already.
Learn more about Ian Murphy at MurphyTrading.com.
