Key points :
- Significant support zone : That zone has been significant since the stock market crash in March. It acted as resistance, aswell as a small consolidation area (02/06 - 03/06).
- It is showing relative strength : Considering yesterday's correction of the overall market, the behavior of individual stocks tell us how strong they are.
- Price rejection + volume : They day before yesterday, the stock gaps down a lot, triggers stop-losses and panic selling, but eventually, it got bought up (5 or 15 min chart).
- Traders Action Zone : To define that zone, I'm using the 30 and the 10 . Basically, the TAZ is pretty useful when stocks are trending. It defines a zone where the general trend resumes after a "breath-taking" pullback.
Traders Action Zone
As you can see on the left side of the chart, it is considered that whenever the 10 is above the 30 , we look for opportunities to go long and vice-versa. After some time, the price over-extends and retraces in the TAZ. Obviously, it should be combined with other signals, in this case what gives us a signal is the of the stock, aswell as the signficant zone.
Here's an example on SPY :
Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer.
***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***