MyTradingJournal
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Price action & Psychology - Inside trader's minds

NASDAQ:MTSC   MTS SYSTEMS CORP
Hello !

Key points :
  • Double bottom
  • Volume on uptrends > volume on downtrends
  • Indecision + rising volume

It all starts with the halfway retracement. The stock makes a new low, buying pressure kicks in, drives price up. The halfway retracement is the result of traders taking profits, see how the volume fades ?

Anyway, the momentum is not enough to break through the resistance and keep the trend going, it reverses.

See how that 50% retracement seems to be a reference point, marked by the indecision candlestick ( doji ) and the spike in volume .

The gaps on the way up tell us that buyers are really aggressive (or covering their shorts).

On the way down, there's once again buying pressure ( candlestick + volume ) around that previous halfway retracement.

Note how the volume crumbles down and the bearish candlestick marks the last burst of the downtrend.
Volume is rising, there's still a healthy balance between buyers and sellers, we should see an increase in traded shares today.

Summary :
  • Those that bought too early (circled zone) either sold or are still holding (an might re-enter or add to their loser)
  • Some will probably buy the double bottom or the just the support
  • It is very unlikely that traders are going to short this zone
  • Those that have an open short position will cover

Thanks for reading and if you have suggestions or wanna 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.***

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