I am thinking about putting a buy stop in place for AAPL just above $190. As you can see from the chart, that would be the logical breakout entry.
A major concern of mine is the RSI divergence that is developing. Last year I did a study of breakouts accompanied by a negative RSI divergence. My findings surprised me. Contrary to popular opinion, the failure rate was about the same as without the divergence. However, and this is key, the rise is not as high. From where I’d have to place my stop, my reward to risk right now would only be 1.5:1.
I probably won’t put in a buy stop since I can’t monitor the volume with this type of entry. However, if I do so a volume surge I may jump in.
You guys can probably tell I’m conflicted about this trade setup.