2 Stochastic Swing Trades

Kane’s %K Hook Day Trading Strategy is a dual time-frame trading method that uses the hourly and the 5-minute time-frame for day trading.

We have adapted it for swing trading by observing the weekly chart for trends and the daily chart for stochastic entries.

1. Stochastic Trade on IVZ Daily

This chart shows the daily price bars of Invesco Ltd (IVZ on NYSE).

The middle panel shows stochastics %K as an orange line. The lowest panel tracks the trend using the weekly time-frame. It prints a green bar if this week has a higher high than the last week. A red bar means that this week made a lower low.

1. Earlier, IVZ broke out above a resistance level.
2. The bullish break-out drifted up for around two months before falling back into the trading range. As price fell, the red bars on the lowest panel highlighted multiple lower lows on the weekly time-frame.
3. Within this bearish context, IVZ rose up and tested the same resistance level. Currently, it is forming a stochastic hook in the overbought region of above 80. This hook completes the short stochastic trading setup.

2. Stochastic Trade on SLM Daily

The SLM Corp (SLM on NASDAQ) is showing similar price action.

1. From the top of the long bullish move, SLM gapped down and continued to fall lower.
2. As price broke below a resistance level, the weekly bars started making lower lows. The higher time-frame has confirmed the change of sentiment.
3. Its daily stochastic %K moved above 80 as price rose to test the earlier resistance. The %K shows a hook down which confirms the short trading setup.

However, in its recent ascent, SLM had seven consecutive bullish bars including a strong outside bar. This bullish momentum does not bode well for short trades.

Learn: Kane’s %K Stochastic Trading Strategy