One of the secrets of the stock market is this:
"A gradual pullback after a stock make new highs is a great swing trading opportunity."
If you do not understand what that means, you will soon know about it. A stock that is in an uptrend will tend to move upwards. But there are time that they will correct. Sometimes because it is overbought and at other times the general market condition causes it to fall. However, a good stock in an uptrend will find support somewhere and then reverse and move higher.
Lets take a look at some stocks below. Please note that all of them made a new high recently (as of this writing) and had a small correction or pullback. This set up a great swing trading opportunity for traders who like to trade pullbacks.
BPMC made a new high but it couldn't shoot higher immediately. The stock corrected to support area which is the consolidation it made recently. When pullback traders saw it, they bought the stock for a nice swing trade.
EDU also made a new high recently. It then corrected to support area and formed a bottoming tail and doji which told traders the downward momentum was slowing down. Observant traders could have bought the stock for a quick swing trade.
The above is a 60 min chart of EDU. Once a trader identifies a setup on the daily chart, he or she will zoom in to the lower time frames to determine a suitable entry point. That is why it is always important to do multiple time frames analysis.
Let us walk through a swing trading opportunity step by step. Below is my annotation of a great swing trading in a stock. Take some time to read it because it contains valuable information if you decide to make swing trading your preferred type of trading.
The above annotations may sounds confusing and tough for the newbie but as you progress in this course you will begin to understand more and more of all the technical, fundamental and sentiment concepts. The above is how a good trader will think. With time, you will also be able to think and act like them.
Charts with the Freestockcharts.com label are courtesy of Freestockcharts.com
Charts with the investing.com logo are courtesy of Investing.com powered by Trading View
May 06, 19 06:04 AM
Technical analysis of the US stock market with coverage of futures.
May 06, 19 05:46 AM
Step by step technical analysis of the KLCI Malaysian stock market.
Apr 22, 19 06:55 AM
A technical analysis of the US stock market. I go through the major indices of the US market and see where it is likely to go.
Apr 22, 19 06:47 AM
Technical analysis of the Hang Seng. Learn how the Hong Kong stock market is doing and where it is likely to go.
Apr 22, 19 06:36 AM
Technical outlook for Malaysia's biggest market cap stock.