Here , in this chart, we have a good example of how the prices are being cushioned at the support level (94.71) with previous records in May 2020. The prices are now being hindered by a upper ceiling , called the resistance at 103.50.
So, we can say prices are in a sideway move or range bound for now. This will go on for a while until one side gives way. That is either it breaks out of the resistance level or breaks down of the support level.
If it is the latter, do you then short it ? I won't since this stock is on an bullish trend. I would monitor its share price if I am keen to long it later. The next support would be 83-88 level.
However, if it does break out of the resistance with bullish signals, then it is a buy as I expect the prices to go up higher towards 116 and beyond.
That is for the chart thus far! But if you look at the fundamentals side, you might want to consider sector rotation since Tech stocks now are coming down a bit and value stocks are being favoured by investors. That is not to say Tech stocks will plunge but in the short term, it is likely to correct itself (which is a good thing if you want to accumulate more shares).
An important aspect of support and resistance is it is to be taken as a GUIDE and not a MUST OBEY rule. That means, prices being supported at a certain level can be temporary or even a false one to trap buyers only to fall through later. Or a fake breakout of a resistance level only to tumble down later as well. Such tricks are common in the market place and one needs to be cautious in execution.
Have I suffered such fate before ? Aplenty !!! The consolation is this temporary losses are compensated by my long term investment outlook so I would not take this paper losses too hard , knowing it will rebound sooner or later .Example, Tencent, Meituan, Xiaomi, Haier, etc.
In short term trading, one need to be mindful of your STOP LOSS cos that is what is going to protect your capital. And it is ALRIGHT to be wrong in some trades even your analysis may be right. Getting too fixated why the market plays you out instead of going along with your plans is tantamount to analysis paralysis. In my opinion, take the losses and quickly move on as there are abundant trade opportunities out there.
Every trader has his or her own trading style and some like to do post mortem analysis , spending hours , weeks to fact find what went WRONG ! I am not so technical nor obsessed to this stage. Sometimes, my mistakes are greed or plain silly like hitting the sell button instead of buy or typing the wrong position size ,etc. Chart wise , I am pretty consistent as I used the same trend lines, supports and resistance, price action patterns ,etc to facilitate my trades.
I hope this write up is useful and I welcome any comments you may have. If you like my train of thoughts, follow me , give me a thumbs up or CHEERS, that would be very much appreciated. Cheers.
So, we can say prices are in a sideway move or range bound for now. This will go on for a while until one side gives way. That is either it breaks out of the resistance level or breaks down of the support level.
If it is the latter, do you then short it ? I won't since this stock is on an bullish trend. I would monitor its share price if I am keen to long it later. The next support would be 83-88 level.
However, if it does break out of the resistance with bullish signals, then it is a buy as I expect the prices to go up higher towards 116 and beyond.
That is for the chart thus far! But if you look at the fundamentals side, you might want to consider sector rotation since Tech stocks now are coming down a bit and value stocks are being favoured by investors. That is not to say Tech stocks will plunge but in the short term, it is likely to correct itself (which is a good thing if you want to accumulate more shares).
An important aspect of support and resistance is it is to be taken as a GUIDE and not a MUST OBEY rule. That means, prices being supported at a certain level can be temporary or even a false one to trap buyers only to fall through later. Or a fake breakout of a resistance level only to tumble down later as well. Such tricks are common in the market place and one needs to be cautious in execution.
Have I suffered such fate before ? Aplenty !!! The consolation is this temporary losses are compensated by my long term investment outlook so I would not take this paper losses too hard , knowing it will rebound sooner or later .Example, Tencent, Meituan, Xiaomi, Haier, etc.
In short term trading, one need to be mindful of your STOP LOSS cos that is what is going to protect your capital. And it is ALRIGHT to be wrong in some trades even your analysis may be right. Getting too fixated why the market plays you out instead of going along with your plans is tantamount to analysis paralysis. In my opinion, take the losses and quickly move on as there are abundant trade opportunities out there.
Every trader has his or her own trading style and some like to do post mortem analysis , spending hours , weeks to fact find what went WRONG ! I am not so technical nor obsessed to this stage. Sometimes, my mistakes are greed or plain silly like hitting the sell button instead of buy or typing the wrong position size ,etc. Chart wise , I am pretty consistent as I used the same trend lines, supports and resistance, price action patterns ,etc to facilitate my trades.
I hope this write up is useful and I welcome any comments you may have. If you like my train of thoughts, follow me , give me a thumbs up or CHEERS, that would be very much appreciated. Cheers.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.