1. The top and the sharp fall were both coming. You could have gone long either on Sept 24 or on 25, and ridden it to the dotted red line. Move a bit to the left and you will find that it has acted as a pretty strong resistance .
2. Price moved beyond the strong resistance, and stayed above it for a while. I'm convinced it is not a bull trap/ fake - out ( It could be , no one is
always correct ).
3. (3) gave an extremely over-bought reading and price was miles away from the MA band. A sharp fall ensued.
4. (3) reaches over-sold territory, price is within the first two MAs , there is a strong long term trend, and the dotted line showed only slight resistance on the way up , and showed no absorption on the way down. I'm looking to buy.
5. I bought intra-day on Friday, when the candle was a red one with an upper tail. I was confident ( or foolish, your choice ). The reversal candle today gives me more confidence to initiate fresh longs, with a stop just below today's low.
6. You can use a risk-reward ratio for a target, or even an ATR based target. I will hold till (3) reaches oversold ( or SL is hit) and then trail stops, until I find a reversal candle, or resistance. This has kept me in many moves I initially thought were only swing trades , but turned out to be huge, almost linear bull moves.