Currently charts I'm paying close attention to has similar patterns as the one below (name is not important).
From a classical charting + technical analysis perspective I will discuss 3 different inflection points and strategies.
From a classical charting + technical analysis perspective I will discuss 3 different inflection points and strategies.
1⃣ Stock completes a H&S top from low volatility condition. Breakdown takes place below the 200-day average. A sell signal (classical charting principles)
2⃣ Stock re-tests lows. Possibility of double bottom but very early stages. A possible buy signal can be justified with only using technical analysis (support/resistance concept). Buy at support, sell at resistance.
This is not a breakout strategy. A mean reversion strategy.
This is not a breakout strategy. A mean reversion strategy.
3⃣ Stock tests previous high with volatility shrinking once again. Breakout above the horizontal resistance can confirm the double bottom. Looking for a buy signal from classical charting principles perspective.
It is important to see the lines you draw on your chart is actually valid. The only way you can confirm this is by making sure market participants validate it.
The more a trend line is tested the higher the chances it is a valid line.
Now price reversed from the horizontal line
The more a trend line is tested the higher the chances it is a valid line.
Now price reversed from the horizontal line
