How The Markets Traps Bulls & BearThe chart of Harmony shows down slopping resistance with support of the broadening wedge & 200DMA aligned. Bulls will buy the support while bears wait to sell the resistance. One of the groups will be right & spur a rush of profit for the other. Since we expect price to be at a half cycle correction, we look for whether price will go lower than 10 July 2023 price, that would be an early sign that bulls might be trapped as price will go lower after a short bounce. Conversely, if we do not go lower, we setup a double bottom.
Bears will wait for resistance to be enticed, fortunately for them, closing above resistance on a weekly basis is a sure sign to close short. Such moves though if purely short covering will lose buyers in a time band for a daily cycle high resulting in price reversing much faster. Confident longs would have been trapped.
As a trader, your goal is to assess the likelihood of things going against you this is why timing bands matter. You are to pick entries that meet the following criteria:
1. Near a daily cycle low with oversold RSI when seeking to go long with gains of +/-10-15%
2. Near a weekly cycle low with oversold RSI or below 50 level, you go long for +/-20-30%
3. Near a yearly low with oversold RSI or below 50 level, you go long for a +/-50-100%. With yearly lows one must be cognisant of Wykoff accumulation, it usually happens and can be quite frustrating to wait so one must buy with that in mind so that capital is not tied up for longer without appreciation. Be on the lookout, take partial profits at turning points (daily cycle high) and buy back (daily cycle low).
For examples of the last scenario, one can look at the following charts:
a) $JSEAPN - For 239 days (July 2022 to March 2023) the share was stuck in a range of +/-18% accumulating. One then must target buying the cycle low, sell the cycle high +/-15%. There were three such opportunities, one gets to grow capital by 15% while waiting for a breakout. The breakout comes and share quickly moves 25%. Often it happens a trader gets tired of sitting and sell, then the rally goes without them and causing psychological turmoil.
b) $JSEANH for 218 days (March 2022 to October 2022)
c) $JSESOL appears to be in this accumulation zone
d) $JSEFSR for 234 days (October 2022 to June 2023)
Conclusion :
I believe as traders we would have rather been buying things and wait for dividends but our capital and time does not allow slow accumulation or endure long periods of inaction. We are working from a position where we must pursue returns above inflation in pursuit of financial freedom. If we can double or triple capital in a short time, we are making strides that give us an advantage. People like Elon Musk, Sergey Brin, Mark Zuckerberg achieved above life returns because they were able to move into spaces where they multiplied their wealth greatly. Consider yourself on this journey too for when you multiply your capital ten times, you can buy property or replace your nine to five incomes with dividends. So do not feel greedy when pursuing big returns in a short space of time. I live for these moves, the 10% in a week, 30% in 40 days or 100% in 90 days. We will not always get it right but if we build capital more times than we lose it, we are on our way.
