Why Making Market Predictions Is Child's Play
One easy-to-read chart can give you - literally - the shape of things to come...
By TOM GENTILE
Source: Money Morning
http://moneymorning.com/2016/07/15/why- ... ilds-play/
Support and resistance levels are the best technical indicators to use because they’re not “lagging indicators,” meaning they give you the price movements in real time.
When you see a rounded top start to form, you'll have plenty of time to pivot.
Our three-step system:
1. Find the Extreme
2. Frame the Trade
3. Book the Profit.
The best way you can play it: simply wait until after the gap and let the stock tell you which way it may go.
To do this, identify the high and low of the gap day.
If the stock closes above the high of the gap day, go bullish and vice versa.
A simple trailing stop loss is the simplest way (15-20% on stock / 30-50% with options).
1. Overstating the predictive ability of charts
2. Drawing conclusions from inconclusive data
3. Projecting target prices
4. Using old irrelevant data
5. Using the wrong time frames
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