$NKE Support Breakout

Two posts ago, I wrote about channels breakouts and volume, more specifically, I applied it to my open $NKE contract to get a more solid understanding of it. I mentioned that I'd use January 20 to understand if the support breakout observed on January 16 was solid or if it was a fake-out. So, let's look at today's chart using the same established channel and see where it closed.

The original support price was ~$64 while the resistance was ~$66.70. In the chart above for January 20 alone, we can't even see the old resistance, only the support. We can two high volumes of sellers around 10 AM & 11 AM. At the same time, we can observe that while the price did go a bit above the "support", it didn't push past $65 at any point in the day. We can refer to this push as re-testing support. We also see that the price closed way below the "support" and this means that what was our support last week, is now our new resistance. What can we infer? We can infer that because it is our new resistance, the price will hang around $62-$64 for a good week or two before we observe any major price changes.

So, my option trade at this very moment has failed. It's okay though, we've established that this second contract was revenge trading and will be avoiding that moving forward. I now face the following decision: do I end the contract tomorrow or do I just let it ride? Given that I have lost the entire profit of it and more, I will be ending my contract with it. As a matter of fact, I'll close it now so it fulfills in the morning.

Let's explore my feelings and thoughts:

I don't feel as hurt by it to be honest. I think this was necessary for me to understand various concepts and to apply them to make smarter decisions. At the same time, I haven't even started learning about stop losses, limit orders, etc. So I will be covering that tomorrow. Do I have regrets? I mean kind of, I do regret not walking away when $NKE reached $67 as I wanted to get that break-even price, but it circles back to me not understanding the various concepts of channels, volume, breakouts, etc.

Tomorrow we will learn how to stop a loss, and will begin exploring new potential stocks. At this time, I won't fund anything new, I will continue to use what I have in my Robinhood account and compound that.

Overall, I am satisfied with the fact that I'm learning more and more. I mean, I can go to an average person who knows nothing about the stock market and the little things I have amounted to gain knowledge on would sound like gibberish. So, I am here, I had a loss, and I am taking it on the chin and moving on. Let's stop losses starting tomorrow.