Price Action & Psychology - Pullback, Trend, SupportHello !
Key points :
Notable support zone
Pullback after breakout
Direction of trend
Volume spikes on uptrend
We've pulled back to an historical important zone, which acted as support. We're taking this trade after a breakout on high volume and wide range candles in the direction of the general trend.
Volume represents the number of shares traded on any given day (talking about a daily chart). So if on that spinning top (2) we've seen high volume, but prices didn't rise, this must mean that sellers were stronger.
I see a few clues here :
Those that bought on the previous resistance (1) and were stuck, sold
Profit-taking from the breakout (2)
The pullback made other traders sell
Considering the price action on the last 2 trading sessions, we see relative low volume and some indecision, we've reached a certain " balance ". This tells us that basically, most of the traders are waiting on the side lines.
What we're looking for here, before we take the trade, is volume . We wanna see buyers come into the market.
Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer.
***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
Tradersactionzone
Price Action & Psychology - Pullback, TrendHello !
Halfway retracement
Key support zone
Direction of the trend + wide-range candles
Indecision + spike in volume
Charts are like books. They tell us a story. We're trading in the direction of the trend, marked by these spikes in volume combined with wide-range candles.
What do the shadows/wicks tell us ? Well there's much conviction here. Whenever buyers are in control, they get very aggressive. Anyway, sellers still manage to bring the price back down (buyers are still in control!).
Obviously, everytime the price gets over-extended it retraces, usually on low volume. This shows that sellers are : 1) not being aggressive, 2) not being numerous. In other words, whenever prices get down, it's not a shift in investors/traders minds, but rather the natural course of profit-takers.
The trade is pretty clear here. After getting rejected from the resistance (and breaking out from the range), the stock comes down, on low volume, showing low interest in selling the stock. The hint here, is the indecision candlestick coupled with a spike in volume. This means, the stock has arrived at an important historical zone and buyers are stepping in.
Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer.
***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
Price Action & Psychology - Pullback, MTFAHello !
Key points :
Pullback after over-extension
Fading volume, downtrend losing steam
Engulfing on higher volume
Wide-range candles defining a strong upward movement
I like pointing out the fact that stocks hold on to certain historical support zones. Traders and investors tend to remember them well, as you can see below :
The general trend is "bullish", meanwhile the temporary trend is "bearish" (correction/pullback). The fact that we saw the volume fade means that the downtrend is running out of steam.
In fact, the engulfing pattern we see, coupled with a higher volume on the green day, confirms the theory that buyers are taking control back, i.e. the primary trend might be about to resume.
Now, on the weekly chart, we spotted that old support zone. And this is what the hourly chart looks like :
Pullbacks can be seen on any timeframe. It seems like that support we defined previously, still matters.
Because stocks never move straight to the upside, we can expect a pullback on the hourly chart. This will be the signal we're waiting for.
Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer.
***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
