Mean Reversion... RIVN oversold. TESLA, Chinese EVs Overbought.

26 сент.

Setup:
Mean Reversion Trade (Long)

Key Criteria:
1. Price has tested a prior breakout/breakdown level, 15+ day pivot in price, or monthly/weekly Fair Value Gap (FVG).
2. Market Cap is above $10 billion.
3. Price swept highs, closed lower, with a gap between the open and previous candle close.

Specifics for RIVN:
* Market Cap: $11.12 billion
* Relative Volume: 1.70
* Technical Level: $11.15 key weekly support level
* Technical Setup: Intraday price crash through known support, followed by a rejection, signaling a potential for a dead cat bounce, especially considering the current EV hype.

Trade Details for RIVN:
* Position: Long
* Entry Price: $11.28
* Stop Loss: $10.98 (below daily pivot)
* Risk per share: $0.30
* Risk: 1% of account equity
* Order Type: Buy Stop Order

Targets:
1. Target 1: $11.85 (1.8R) — Based on weekly and monthly FVG.
2. Target 2: $12.75 (4.75R) — Based on weekly and monthly resistance levels.

Exit Techniques:
1. Scale out 33% at Target 1.
2. Scale out another 33% at Target 2.
3. Exit the remaining 34% based on a "Reason2Sell" approach:
* Price Reversal Patterns: Double tops, head and shoulders, falling wedges.
* Overbought Conditions: RSI exceeding 70.
* Negative Divergence: Price makes a new high, but indicators don’t confirm.
* Support Level Breakdown: Price breaking below significant support levels.
* Increased Volatility: Sudden surge in volatility or volume, indicating selling pressure.
* Volume Nodes: Observe price action around liquidity points.

Reasoning:
Rivian has been overshadowed by Tesla, Waymo, and Chinese EVs in recent news, but the current price drop offers an opportunity for a mean reversion trade. The stock has filled the gap created by the Volvo investment news, and yesterday’s price action shows potential for a long entry after rejecting the $11.21 intraday support level. This could be an intraday breakout that transitions into a swing trade, aiming for a target range between $12 and $13. The tight spread provides a favorable risk-to-reward ratio for this setup.

Stop Loss Strategy:
* Adjust the stop loss after Target 1 is reached, scaling out accordingly.

Additional Notes:
* Set orders to automatically scale out shares as profit targets are met. If you’re holding the full position size after hitting targets, manage your risk accordingly.
* Feel free to reach out with any questions for further clarification or support.