Primary Strategy: Balance Invalidation & Darvas Box Violation
I. THE RISK/REWARD PROFILE
- Conviction Level: High (Structural Imbalance)
- Risk/Reward Ratio: 4.8 : 1
- Asymmetry: Risking $4.00 to capture $19.25
II. EXECUTION PARAMETERS
- 🔴 Entry (Short): $114.05 (Confirmed violation of the 1-year Balance Floor)
- 🛑 Stop-Loss: $120.05 (Re-entry into the Darvas "Upper Box" / Previous Distribution)
- 🎯 Target: $95.50 (High-Volume Node / Secondary Structural Floor)
III. STRUCTURAL LOGIC
$DG has transitioned from a long-term Balance Area into a state of Imbalance. For the better part of the last few months, the market found "Fair Value" within a defined range, but recent price action has definitively violated the Value Area Low (VAL).
According to Darvas Box logic, the stock has moved out of its consolidated "safe zone" and into a lower structural box. Our entry at 114.05 capitalizes on the discovery phase where the market is searching for a new, lower equilibrium.
The Livermore "Path of Least Resistance" is now clearly downward. By placing our protective stop at 120.05, we are defining the limit of our thesis: if the stock recaptures the previous balance floor, the imbalance has failed, and we exit with minimal friction. We are targeting 95.50, a major historical node where we expect responsive buyers to finally emerge.