The above chart is a classic example of how a negative news creates opportunity for investment. RSI oversold with heavy volumes is for accumulation. Subsequently swing bottom confirms the end of correction or pause of correction or fall. Then Dow Theory reversal confirms the end of fall and major reversal. Now the stock is approaching int the breakdown down zone that was seen few months back. RSI in overbought zone and price resistance zone of the earlier breakdown candle. Those accumulate in absolute panic opportunity created and indicated by RSI now get opportunity to book profits. A spike could happen for better higher price. Momentum on daily chart see can extend to purple line. The objective to showing the example is how negative news flows create opportunity. based on charts and its indicators structure/concepts.
This is absolute power of rsi : normal rsi red, blue, green= new uptrend begins green, blue = up trend as long as red is not witnessed green blue, red= new down trend begins. red, blue = down trend as long as green is not witnessed
Averages Sync for UP trend on daily chart. Attempt for breakout from the wider sideways range denoted by the purple lines. Volatility will be a function of lower time frame in comparison to the chart time frame which we are watching. since breakout does not happen in vertical line most of the time. Therefore, when we look at the lower time frame chart it will be associated with oversold and overbought to understand the volatility if higher trend breakout is visible then look for a point from where it can fail the support and trading higher bottom Our rules of open will always help to be in track with market and in line with market
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