[Premium] Trade Of The Week

This week we're expecting an increase in volatility due to the US elections, so to compensate for that, we're outlining a setup that requires further market strength for it to trigger.

Equities have been under pressure for a few weeks now, with Europe being hit the hardest, so rather than try to chase a short setup in the hole we're going to look for a long opportunity.

With that said, we only want to be in names that are are in uptrends, are exhibiting absolute momentum, and are also showing relative strength across timeframes.

Today, the name we're focused on is Central Depository Services (CDSL).

Click on chart to enlarge view.

The stock has been basing at the top of a 3-year base over the last two months and is now attempting to break out to new all-time highs. A daily close above 495 would signal to us that prices have successfully broken out of this bull flag and are beginning their next leg higher.

At that point, we can enter the trade and use the recent lows near 442 as our risk management level, with a 1-3 month price target near 648.

As we discussed at the top of the post, we're remaining patient and waiting for confirmation here before getting involved.

Given the volatility stocks have been experiencing since late August, this more conservative approach continues to be prudent, particularly this week and the weeks following given there's a political event in the US that is completely out of our control and likely to impact markets significantly.

And if you're a Premium Member, be sure to check out our other weekly post, "Three Charts For The Week Ahead."

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team