CAB was giving a trading signal that it may be ready to reverse its near term correction wave. CAB is possibly near completion of an A wave of an ABC correction from its trading range of 4.18 to 16.87. This trading range could have completed a five wave sequence in which the following correction waves will need to be calculated with the intent that CAB trades lower before breaking this recent trading level of 16.87.
Possible Fibonacci retracement levels from the five wave uptrend are 12.83, 10.52 and 9.02. We are currently at the 32% level and just traded to a low of 12.59 today and closing at 12.84. Closing at this Fibonacci level along with MACD signal crossing and tests at our trading time frame could have signaled a short term reversal for CAB.
Today we watched CAB trade off this 12.59 low and retest this level on the one minute trading time frame. Using this trading time frame we saw CAB reach its 1 minute wave 3 level of 13.03 easily. A wave 5 level for one minute trading time frame would be 13.31 which is anticipated. Stop loss level for this one minute trading time frame level would be 12.61.
There is a chance however to let a winner run here if this trading low is not breached. If we want to trade a longer time frame, say the 5 minute, we could recalculate our trading wave levels using the complete trading range of the day as a wave one magnitude.
This will be how we will attempt to profit from the trading buy signal given today since the one minute trading time frame waves have almost completed themselves for little yield. The link below will follow these trading levels.
Overall, a lot attention should be paid to the reversal of the wave sequence in many stocks trading. Many have begun to correct even as the market as a whole goes higher. Understanding what wave you are in is essential. If the stock is in a short term down trend the corrective B wave will only be 3 waves long. The initial A down trend and following final C down trend are a full 5 waves.
The short term trade analysis for CAB is being tracked in its trading alerts page.