Leap Wireless Shares Trading Within The Technicals

LEAP has been trading nicely within a Elliott Wave pattern. The potential trade setup to watch is the completion of a wave 3 off the 11.98 trading low. This profit level would be about 21.25. There is a trading signal already setup to follow.

leap_01_07_10_wave5ofwave3

The latest trading high for LEAP off the 11.98 low has been 19.21. The underperformance of wave 3 so far leaves room for more upside- if the latest retracement levels hold. The diagram shows three completed waves within the parent wave 3. The following analysis follows the internal waves of the parent wave 3.

LEAP has traded from a high of 19.21, a possible wave 3 high, to a possible wave 4 low of 16.25 yesterday. This is one penny above the wave 2 low of 16.24. If there is still room in the parent wave 3 price target, then this low must hold for LEAP to trade higher.

Today, LEAP tested the internal wave 2 low again trading to 16.27 on very strong volume, but did not rebound nicely as it did this morning off the low.

Reading the MACD on a minute trading time frame, the latest sharp move downward indicates that a third double bottom would have to occur to keep from testing lower support level as a wave 3 MACD may not have been tested sufficiently.

If the parent wave 3 of LEAP is complete, and this internal wave 2 low support level is broken, it is more likely that LEAP will trade towards 14.72 before a move higher. This is a 62% retracement to test the parent wave 2 support level.

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By SSTtrader | January 7, 2010 | Watch List | 1 Comment |

  • Friday, the trade on LEAP broke what we had as our internal wave 2 of wave 3 at a level of 16.24.

    If you were following the trade you may have been discouraged because LEAP traded higher during the day and closed above the stop we had in.

    One case could be that our internal wave count was off and our anticipated wave 4 low was not correct.

    The parent wave 3 would have to correct either 46 or 53 percent of the move from 11.98 since wave 2 corrected 38%. The 16.10 low on Friday may have confirmed a 46% retracement from the 11.98 low, but that price point would have been 15.88. The 53% retracement level would be 15.37.

    Also, after this new move lower, the 5 minute trading time frame MACD may not be resolved yet. The current MACD reading on the 1 minute trading time frame is also unresolved, meaning that the wave 3 has not been tested and a new price low could come.

    This new move lower could also be the correction of the parent wave 1. An hourly chart MACD shows that the recent move past 16.24 has created a new wave 3 low to test. This could mean that a simple correction will occur in which the final wave of the correction will trade at least 62%. This level would be 14.72.