Stage Analysis- Bottom Fishing
PLTR -Example
CMP 6.95
Let’s try to bottom fish a stock with help of stage investing method.
Keep in consideration that it might go wrong . We only get into this by using some additional indicators and that too where we find risk-reward ratio in our favor and with a strict stop-loss (SL)
Weekly chart
As is obvious in the chart, that we’re far away from 30 WMS as well as 9 WMA.
So why we’re trying it.
Four reasons :
- Clear divergence on RSI indicator – price is making lower low but RSI is not making a new low for last few weeks
- It is now moving in a range , may be a Stage 1 formation
Reason 3rd and 4th come from Daily chart
- Price has gone and closed above 20 DMA and 40 DMA
- MACD has gone in buy zone.
Like mentioned before, it can go wrong and Stage 2 might not come as of now . But just for learning and tracking purpose, we’re putting this post.
Disclaimer :This post is just for learning few methods of price-patterns. Views are personal. No buy/sell recommendations. These are probability study methods and chances of success/failure depend upon various factors.
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