Stay out when Line L is broken to protect your portfolio!
Stay out when Line L is broken to protect your portfolio!
What is Line L? Line L is a horizontal line that connects the security lowest price reached previously and later retested and penetrated.
Never average into a stock when you see Line L is broken. If you average into a stock when the price plunge after Line L is broken you will amplify your losses significantly. Let me give you an example. With the weekly chart of ADMA, you can see Line L is broken on Feb 23, 2015, followed by -$2.35 drop that is -23.94% of your portfolio. This happened again on Dec 28, 2015, followed by -$3.66 drop that is -46.50% of your portfolio. Again, this happened on May 8, 2017, followed by -$2.00 drop that is -48.16% of your portfolio. This pattern repeated on Dec 10, 2018, followed by -$2.48 that is -54.94% of your portfolio. Lastly, on Feb 3, 2020, Line L is broken followed by -$1.46 that is -$43.18%. Currently, Line L is at around $1.75, if Line L is broken again at $1.75 then there is a high probability the stock may be more bearish once the price breakout of this descending triangle pattern.
I used the market probe price level to determine the price for my Line L. A market probe is a way for the bulls and bears to measure the market desire to advance further in the current trend direction or not. For an explanation of a market probe, please read my article on December 12, 2020, with the title, "A Market Probe versus A Shadow."
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Greenfield
Disclosure: Just a market opinion by Greenfield Analysis LLC for educational purposes. This is not a recommendation. Greenfield Analysis LLC has no investment in any of the securities mentioned in the article, and no plan to initiate a trade in any of the securities mentioned. Investment involves substantial risk. You should consider carefully before making an investment. Investment at your own risk.
What is Line L? Line L is a horizontal line that connects the security lowest price reached previously and later retested and penetrated.
Never average into a stock when you see Line L is broken. If you average into a stock when the price plunge after Line L is broken you will amplify your losses significantly. Let me give you an example. With the weekly chart of ADMA, you can see Line L is broken on Feb 23, 2015, followed by -$2.35 drop that is -23.94% of your portfolio. This happened again on Dec 28, 2015, followed by -$3.66 drop that is -46.50% of your portfolio. Again, this happened on May 8, 2017, followed by -$2.00 drop that is -48.16% of your portfolio. This pattern repeated on Dec 10, 2018, followed by -$2.48 that is -54.94% of your portfolio. Lastly, on Feb 3, 2020, Line L is broken followed by -$1.46 that is -$43.18%. Currently, Line L is at around $1.75, if Line L is broken again at $1.75 then there is a high probability the stock may be more bearish once the price breakout of this descending triangle pattern.
I used the market probe price level to determine the price for my Line L. A market probe is a way for the bulls and bears to measure the market desire to advance further in the current trend direction or not. For an explanation of a market probe, please read my article on December 12, 2020, with the title, "A Market Probe versus A Shadow."
Thank you for reading! Please click Like and click Follow to see more articles and examples.
Greenfield
Disclosure: Just a market opinion by Greenfield Analysis LLC for educational purposes. This is not a recommendation. Greenfield Analysis LLC has no investment in any of the securities mentioned in the article, and no plan to initiate a trade in any of the securities mentioned. Investment involves substantial risk. You should consider carefully before making an investment. Investment at your own risk.