Contents:
- Introduction
- Tactical Entry Setup
- Risk vs. Reward Analysis
- Trade Execution Plan
- Final Tactical Entry Decision
- Next Steps
Introduction
This trade analysis focuses on a high-conviction tactical entry for MacroAsia Corporation (PSE: MAC) based on our Hybrid 10-Step Trading Strategy. Unlike a full-position entry, this trade is a calculated risk, leveraging technical levels to maximize potential upside while minimizing exposure to downside risk.
We intend to enter 400 shares, which represents 50% of our planned 800-share allocation, in a critical price zone where MAC is trading between the 20-day moving average (20-MA) and the 200-day moving average (200-MA). The goal is to take a strategic position while ensuring that we have room to adjust if price action changes.
MAC Tactical Entry Decision – Risk-Managed Buy Plan Using the Hybrid 10-Step
Tactical Entry Setup
MAC is currently trading at ₱5.52, sitting just above the 200-MA at ₱5.31 and the 20-MA at ₱5.45. This zone often acts as a critical decision area, where price either rebounds strongly or breaks down further.
A double bottom pattern appears to be forming, with two distinct troughs at ₱4.96, suggesting a possible bullish reversal. However, for this pattern to fully confirm, price must break above ₱6.00 and sustain momentum toward ₱6.33, where strong resistance exists.
The reason for considering a tactical entry now is that the 20-MA and 200-MA are converging, which often signals a high-probability price action zone. Buying within this area allows us to take advantage of a low-risk, high-reward setup while keeping a strict stop-loss strategy in place.
Risk vs. Reward Analysis
The stop-loss for this trade is set at ₱5.20, which is just below the key swing low. If the price breaks below this level, it would invalidate the bullish setup and confirm further downside risk. The first profit target is at ₱6.00, which marks the neckline resistance of the double bottom formation. If price breaks above this level, the second target is ₱6.33, which aligns with the 50% Fibonacci retracement level from its previous downtrend.
If MAC reaches ₱6.00, it represents an 8.69% gain from our entry. If the price extends toward ₱6.33, the profit potential rises to 14.67%. On the downside, if the stop-loss at ₱5.20 is hit, we would incur a 5.80% loss.
This means the risk-to-reward ratio for the first target is approximately 1.5:1, while for the second target, it is 2.5:1, making this a favorable setup with more upside potential than downside risk.
However, if MAC fails to break above ₱6.00 and faces selling pressure, the trade could stall, leading to a potential reversal toward ₱5.00 or lower. This is why strict risk management is necessary, and we will exit the trade if the stop-loss is triggered.
Trade Execution Plan
To manage risk effectively, we will execute this trade in two parts.
First, we will enter 400 shares between ₱5.31 and ₱5.52. This represents 50% of our total planned 800-share position. By starting with a smaller position, we reduce exposure in case of a false breakout while still participating in a potential bullish move.
Second, we will only add the remaining 400 shares if MAC breaks above ₱6.00 with strong volume confirmation. This ensures that we only commit fully to the trade once bullish momentum is validated.
The stop-loss is strictly set at ₱5.20, which will protect against downside risk. If MAC closes below this level, we immediately exit the trade, avoiding further losses.
The profit-taking strategy is to sell 200 shares at ₱6.00 if price reaches the first target. The remaining 200 shares will be sold at ₱6.33 if momentum continues. If the price struggles to hold ₱6.00, we will adjust the plan accordingly to protect gains.
Final Tactical Entry Decision
This is a strategic and calculated risk trade with a favorable risk-to-reward profile.
Reasons why we are taking the trade:
- The double bottom pattern is forming, signaling a possible bullish reversal.
- The 200-MA is acting as strong support, making this an attractive buy zone.
- The risk-to-reward ratio is favorable, with a potential upside of 14.67% and a limited downside of 5.80%.
- A break above ₱6.00 would confirm a bullish breakout, which is why we are keeping 50% of our allocation in reserve.
Risks that need to be considered:
- The breakout is not yet confirmed.
- A false breakout could lead to another rejection at ₱6.00, causing the price to reverse.
- If MAC breaks below ₱5.30, it may head toward ₱5.00 or lower, invalidating the bullish setup.
The best way to manage this risk is by keeping our stop-loss strict at ₱5.20 and only committing the second half of the position if MAC confirms the breakout above ₱6.00.
Next Steps
For traders executing this setup:
- Buy 400 shares within ₱5.31-₱5.52.
- Set a stop-loss at ₱5.20 and do not lower it.
- Sell 200 shares at ₱6.00 if the price reaches the first target.
- Sell the remaining 200 shares at ₱6.33 if the breakout sustains.
- Only add another 400 shares if MAC breaks ₱6.00 with strong volume.
For those who prefer a more conservative approach, it is advisable to wait for MAC to confirm the breakout above ₱6.00 before entering.
If MAC fails to sustain momentum and shows signs of weakness, we will reassess the trade and decide whether to exit early to protect capital.
This is a high-reward trade with moderate risk, but strict discipline is required to ensure a successful execution.
Related Post:
Stock Price Review: MAC Daily Chart – Buy or Sell Decision – January 24, 2025
Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.
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