Traders need to check weekly charts when considering selling short stocks at this time. Many times there are strong support levels close to the current sold down price action.
The weekly charts also provide more data for day and swing traders to determine the all important RUN GAIN POTENTIAL. This must be calculated before any trade to determine the Risk versus Profit Potential for that trade, regardless of whether the hold time is a few minutes or several days for swing trading.
For many stocks, the recent selling down is not due to weaker earnings expectations but due to an overall reaction to retail news regarding international conflicts, US government uncertainties and regional wars.
The key element for trading stocks short-term is to understand where support will kick in and halt a sell short trade. Understanding the functionality and the strength or weakness of a support level is crucial to attaining a high-profit trade.
It is also a factor if you are waiting on the Dark Pool Buy Zone levels for getting into the stock for a run up from support levels.
Below is a chart of AMZN, which reports earnings on Thursday this week after the market close.
It shows that support is strong near the current price level. This indicates that the Dark Pool Buy Zone is within that technical price range. Selling short is inherently higher risk as the support level is a long-term trend strong support.
Why is it so strong?
1. There is a several-week price range that held the stock up.
2. Highs are a support mechanism when the stock market is not in a long-term downtrend. ALL
traders should know that this is not a bear market. Indexes are in a Trading Range.
3. The length of the candles is significant and relevant to the strength of the support.
The weekly charts also provide more data for day and swing traders to determine the all important RUN GAIN POTENTIAL. This must be calculated before any trade to determine the Risk versus Profit Potential for that trade, regardless of whether the hold time is a few minutes or several days for swing trading.
For many stocks, the recent selling down is not due to weaker earnings expectations but due to an overall reaction to retail news regarding international conflicts, US government uncertainties and regional wars.
The key element for trading stocks short-term is to understand where support will kick in and halt a sell short trade. Understanding the functionality and the strength or weakness of a support level is crucial to attaining a high-profit trade.
It is also a factor if you are waiting on the Dark Pool Buy Zone levels for getting into the stock for a run up from support levels.
Below is a chart of AMZN, which reports earnings on Thursday this week after the market close.
It shows that support is strong near the current price level. This indicates that the Dark Pool Buy Zone is within that technical price range. Selling short is inherently higher risk as the support level is a long-term trend strong support.
Why is it so strong?
1. There is a several-week price range that held the stock up.
2. Highs are a support mechanism when the stock market is not in a long-term downtrend. ALL
traders should know that this is not a bear market. Indexes are in a Trading Range.
3. The length of the candles is significant and relevant to the strength of the support.
Martha Stokes, CMT
www.TechniTrader.Courses
Learn how to use the technical patterns of each market participant for better trade planning.
www.TechniTrader.Courses
Learn how to use the technical patterns of each market participant for better trade planning.
