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Estalishing a short position in Cheesecake Factory by swing trading on multiple time frames

cheesecake failI will often stress the importance of trading off of multiple time frames. Typically, if I can get a short-setup to line up on the 5 minute and daily charts that is usually a setup that I won't hesitate to take. 

But finding trades that line up ideally on multiple time frames isn't the easiest setups to find, so often times, as traders, we'll look at one time frame, like what we see, and be done with it. 

In the case of Cheesecake Factory (CAKE) though, you'll see that it lines up perfectly on the five-minute chart that shows a rejection at a well-defined resistance level, as well as a developing head and shoulders pattern

CAKE short setup on the 5 minute time frame

CAKE 5min

Now look at the daily chart, and you'll see a well-defined down-trend since the beginning of October where the price action has been unable to get back above the declining trend-line and that helps to define the risk on the trade, and in this case, it's only about 2%, which is hard to beat for swing-traders. 

CAKE short setup on the daily chart

Cake Daily short setup

On this same chart, you'll see that I posted the stop-loss just above the declining trend-line, and each day I'll adjust the stop-loss to where it is just a shade above the trend. 

The risk reward is also favorable as well. I'm short from $33.50. Stoploss is marked on the daily chart at $34.25, with at target around $31. 

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ryan1Ryan (@shareplanner) specializes in swing trading strategies and is the founder of SharePlanner which he created to help and teach others on how to trade stocks better using multiple approaches and time frames. Each day you can count on Ryan to provide his trading advice as well as transparency in every trade that he makes. Ryan Mallory resides in Central Florida. More >>

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