dRends35

RKLB - Phase B Of An Accumulation?

BATS:RKLB   Rocket Lab USA, Inc.
RKLB

Had a big dump this week with the 1:1 Golden Window extension in Regular Trading Hours perfectly catching the low and this has only just exceeded the blue retracement GW.

This is a great example of why it is important to use the 24 hour chart with Extended Trading Hours because outside of RTH RKLB dumped hard below the circled accumulative low.


So this stab down went beyond the retracement low and a full retracement was completed.

If you remember that a rule of the retracement GW is when it is significantly exceeded, then we can expect a full retracement.

And so there is an interesting conundrum here because the full retracement already happened in one enormous stab down that then bounced outside of RTH.

So its not entirely clear but this stab down will create inconsistency in liquidity and for that reason there is more chance that RKLB will explore down to the lows in RTH at some point.

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If we look at the way RKLB collapsed it was with high momentum and so this doesn't look like a retracement in a bullish trend.

The initial move up did look bullish and appeared to show genuine growth rather than a sudden automatic rally short squeeze and that is positive but the momentum of this collapse entirely nullifies the uptrend.

This suggests that we are beginning phase B of a Wyckoff accumulation where we've had a good pop showing some life signs but bearish momentum has taken over and this can potentially re-test the lows before the next bullish attempt.

Now that RKLB has dumped, can you see how important that large bearish shakeout candle was that re-tested resistance?

If you sold there as suggested before then you are doing very well now.

What we are finding is that the size of the shakeout gives us a clue to determine how large the move will be in the opposite direction.

Here we have a large shakeout candle and then a very large dump followed.

As I have been saying, I'm very excited about this discovery because I have never seen this pattern addressed or understood in this way by anyone, not in any book or video, and it is a very lucrative realisation for both high and low time frame trading.

In the last video we went through quite a few of these patterns that we have identified over the last few months and seen them play out so hopefully you are starting to have a grasp of how they work and how to identify them.

Notice also there are are multiple of liquidity shakeouts at the top through resistance and also the 500 day MA.

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Ok so the large stab down and bounce on the 24H chart has printed a large wick which forms a strong bullish hammer candle and that is also a liquidity shakeout below the low which with liquidity tapped is also bullish because there is higher chance market movers will continue to move away from that liquidity pocket.

And so there is a reasonable chance we will see a large bounce at some point soon.

What I wrote doesn't prove we will see an immediate bounce and there could be some corrective price action first, but it signals that one is coming.

Now looking to the RSI, it hit 20 and on the 4H and 1H chart it went below 20, so this also suggests a good bounce is in the pipeline.

It may well be that the bounce has to tie in with indexes which are currently looking very bearish in the short term, but whenever they have a minor upside retracement then that can be the platform for RKLB to have a large but probably regressive (connective wave to go lower) bounce.

So if you bought in the circled accumulation, that was a good buy and I would suggest that if you like RKLB and its a name you want to hold long term then you may decide to simply hold your position. That entry is right at the low for this area and there is a reasonable chance that will remain the value low area.

This was previously our next buy area but due to downside momentum and bearish indexes it is a somewhat aggressive play to top up here for a long term hold.

There is a chance that this is the value low right here, but I think there is at least equal chance that it will at some point down the road re-test the actual low.

There is also opportunity for a somewhat aggressive short range swing trade here on the bounce. It is slightly dicey due to indexes looking bearish but looking at the chart alone it is on.

So it could be worth buying a little here next week just for the bounce and we will look for a retracement ratio, MAs etc to sell in a little while.

Also if you bought in the accumulation but its not ultra important for you to hold RKLB long term, you could partial sell on a bounce. For my preference if you have a long term view, to sell your entire position on a short term play is too aggressive but we all have to decide our personal level of aggression depending on our goals.

If you want a simple life and you bought in the circled accumulation you may decide just to hold. That was a good entry. Be aware however that its not impossible that this whole area could end up being a connective wave to see another wave down.

I think that considering how long RKLB has been in this area it is much more likely that this is part of an accumulation not a connective wave, but these high volatility names play deceptive games and conceal the sting in the tail so we should be aware that it could happen and not leave ourselves too exposed by having too much on the line.

This chart is a great example of why it is important to stagger in to see how it develops and also it was a great example of how the shakeout pattern can show opportunity / danger.

Not advice

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