Chart Interpretation
Simply introducing the 'form' would be meaningless, so let me describe the underlying concept.
This is probably the third time in the past year that resources have surged. Last time, it led to a major market rally, but apparently, tensions with China/Russia tend to drive resource prices higher.
The recent price action has been generally moving in line with the broader market. The overall market correction mostly concluded by the end of the year.
After CRML had a big market run, it triggered a series of stop-losses down to the 200-day moving average (MA), then attempted a rebound, but was rejected near the 50-day MA. A second attempt also failed at the 50-day MA, and eventually broke below the 200-day MA.
Relatively savvy investors buy on the second breakout above the 200-day MA and place their stop-loss just below the recent low.
A downtrend is defined as forming lower lows beneath the previous low, so this low point determines the structure of the downtrend.
If the price forms a higher low above this key low point and rebounds, it suggests a potential shift to an uptrend, making it a crucial inflection point.
While profit-taking may aim for a breakout above the 50-day MA, if there’s no momentum to break through the 50-day MA, it's time to sell quickly.
Markets don’t always follow rigid definitions, which is an interesting aspect.
In this case, since the right side of the double bottom (or even triple bottom) has broken below the previous low, it indicates that the downtrend hasn't ended and the price structure remains unchanged.
Since the price failed to find buying support at a crucial turning point, it can be said that buyers are losing at this stage.
Given that there was no buying at what should have been the most bought point, typically breaking this low would accelerate the decline. That’s the kind of critical point it is.
However, in reality, although a bearish candlestick appeared the next day, the day after that saw a small-bodied Doji with minimal price movement — not dropping much.
This indicates balance. Since the price holds up at a point where a drop should accelerate, even though it should be weak but isn’t, we can say it’s strong.
There aren't many sellers. The shrinking volatility is also a positive sign, showing that price consensus is forming. Even if waiting for an entry or already entered, the limited fluctuations mean lower risk.
Then, news from Venezuela came in.
If there aren’t enough sellers and a strong catalyst appears, prices could rise significantly.
Looking at the previous big market move, the stock rose without much pullback, so considering its character, although a momentum of 3-5 days is typically expected, it may be reasonable to look out to 5 days.
The entry should be timed around the break of the 50-day moving average (MA). For the stop-loss, if the price falls back to the 50 MA and lacks the power to rebound, this creates a favorable risk-reward trade opportunity.
After bouncing off the 50-day moving average (MA) earlier, since the price has now broken through the 50 MA with strong momentum, it’s a buy signal.
O'Neil and Minervini say to buy stocks trading near their yearly highs, but such stocks have usually already taken off like a rocket.
Memory system, space system.
If the timing is bad or opportunities are scarce, though quality may be lower, the only option is to look for themes and trade reversals from the bottom range.
The best kind of stock is one with continuously growing profit-generating capabilities; these tend to have long trends.
Speculative trades don’t lead to long trends, so with that understanding, let’s enjoy our trading.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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仏熊苦 OP : The momentum continuation day forecast was also nearly perfect.
仏熊苦 OP : In the resource sector, only CRML is reacting significantly. I feel like it could be more spread out among Cameco, MP, antimony, copper, and others.
I wonder what the factor is.
I thought the same thing last October. I wonder what it is.
This might be my first big judgment mistake of the year. I feel like I'm overlooking something. But I definitely won’t chase after it.
仏熊苦 OP : The rise after the momentum ended was probably a short-covering squeeze.
This is a frequently occurring pattern where there's a sharp rise over three days at the end of a short-term surge. I call it the 'Three-Day Reign.'
This part, where it rises too much and people give up, typically marks the peak of buying.