Cloudflare teaching moment. Meteoric rise = catastrophic dump.Hi everyone,
Today I would like to share a piece of knowledge on parabolic growth and poor market structures.
Let us take a look at NYSE:NET Cloudflare stock.
This was an attractive buy back in 2020. As always, nobody saw that until everyone started screaming about this stock on Twitter.
I saw an opportunity in investing into Cloudflare later in 2021 for a long-term.
I did not know what's coming.
At the beginning of October, after a decent sell-off something strange began happening.
Stock rose TWELVE days in a row. And not just stayed barely positive, it gained insane 68% in price during this short period.
Right there I knew this was not sustainable and price won't last up there for long.
Yes, I sold at 175 .
Yes, I missed a run up to 220 .
But, really, did I?
Noone can predict the top. But you can predict the inevitable downfall.
The Lesson.
Look at the chart.
You see the price in the first box going parabolicly up. The price took off to the moon and was hovering up in the air. Thus, poor structure has been created.
There is no single support level from 137 to 182 .
The Market hates poor weak structures and it tends to repair them sooner or later.
That is exactly what happened with Cloudflare stock.
Price has been flushed from 204 down to 123 as fast as it flew up there back in October. You can see that in the second box.
The structure has been repaired. A lot of data points were created in the process, which will help with the analysis in the future.
This might be a rebirth of Cloudflare stock constituting healthy future movement.
Trade wisely and good luck!
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Disclaimer!!!
This is not financial advise
