This is a strategy that I have been using to help me have a better idea on where flooring action may take place on the charts. I also use it to help me get a better idea on where I should start dollar cost averaging into assets that I want to accumulate and hold more of in my long term holding portfolio.
*Please note that you can use any EMA or SMA but, the higher the timeframe the better as this will give you a more realistic target area. Please remember that I say "area" as no one can say where the absolute top or bottom will be. I will show you a mathematical average in this idea which means it may fall short or it could cut through a bit... this is just an average.
Using the 200SMA as a reference point, I have manually measured moves below it once the 200SMA does not continue to hold up as support. I only measured price action that stayed below the SMA for more than 20 days as we did not want to consider every move in our strategy and only wanted to weigh price action significant enough to possibly reflect what could come in the future during a bear or crab market scenario. Also, please note that the start of the measurement is from when price action breaks down from the 200SMA to the absolute bottom.
Combine the past price action moves below the 200SMA and you will find the average shown in the chart. Please remember that I use this average outcome to start a dollar cost average strategy. This is not a post to tell you where the bottom of price action maybe.
Personally I dollar cost average in moves of four. That means I am prepared to buy at four different areas on the chart and each time that I do, I reinforce my initial buy order by scaling up my later orders. For example:
1st buy - 10%
2nd buy - 20% * This is at our average measured move that we calculated
3rd buy - 35%
4th buy - All remaining capital reserved to invest in this asset is deployed at this last buy zone
* please remember to never over extend yourself and never invest with money you can not afford to lose or sit on for a while.
*Please note that you can use any EMA or SMA but, the higher the timeframe the better as this will give you a more realistic target area. Please remember that I say "area" as no one can say where the absolute top or bottom will be. I will show you a mathematical average in this idea which means it may fall short or it could cut through a bit... this is just an average.
Using the 200SMA as a reference point, I have manually measured moves below it once the 200SMA does not continue to hold up as support. I only measured price action that stayed below the SMA for more than 20 days as we did not want to consider every move in our strategy and only wanted to weigh price action significant enough to possibly reflect what could come in the future during a bear or crab market scenario. Also, please note that the start of the measurement is from when price action breaks down from the 200SMA to the absolute bottom.
Combine the past price action moves below the 200SMA and you will find the average shown in the chart. Please remember that I use this average outcome to start a dollar cost average strategy. This is not a post to tell you where the bottom of price action maybe.
Personally I dollar cost average in moves of four. That means I am prepared to buy at four different areas on the chart and each time that I do, I reinforce my initial buy order by scaling up my later orders. For example:
1st buy - 10%
2nd buy - 20% * This is at our average measured move that we calculated
3rd buy - 35%
4th buy - All remaining capital reserved to invest in this asset is deployed at this last buy zone
* please remember to never over extend yourself and never invest with money you can not afford to lose or sit on for a while.