Personally, this could have been a trade I would have entered at ~$2.00, however because of the continued sideways movement I would have also exited. Too much time sideways for me.
I would prefer an entry at ~~$1.85-$1.90 if it meandered back to there.
brty
4. What is the action when it gets to support (should be relatively fast bounce or I get out if I have bought).
You need to show me how
???I can go around telling everyone how i would have bought it lower then them as well.
brty;530551 The lower price I mentioned has not happened said:A couple of things,
1. The lower price you mentioned hasn't happened, so how can u call the price that hasn't happened a support entry point?
2. What is your criteria? You mention "what is the price action? it needs to be a sharp bounce."
How is that measureable? You have asked a question as your criteria? Not given a specific measureable entry method.
3. Do you have any statistical evidence to support that after four times support has been hit, that a move up is less probable?
I am not disputing that it is or isn't im just interested to see if you have evidence of this, or is just your opinion?
3. Do you have any statistical evidence to support that after four times support has been hit, that a move up is less probable?
I am not disputing that it is or isn't im just interested to see if you have evidence of this, or is just your opinion?
It just makes sense. Surely you want to see a support level being touched and then moving away fast. Not continually returning to the same level. To me that sounds like a dead cat rather than a rocket.
Not to mention the time cost.
I would love to see the statistics behind the probabilities of a move up after X amount of tests of support. Also would like to see if there is a correlation between the distance that price will move relative to the amount of times S/R are hit.
Depending on the context, i believe either scenarios could provide optimal results.
And here is why, (right or wrong my opinion).
A stock is trading at $1.00. Support is established at .70 cents. A large investment firm is prepared to pay .70 and has 10 million dollars worth to purchase. If support is hit twice, only half the quota can been supplied due to available stock at this price. Demand does not increase, but rather supply moves to higher prices. It moves to 1.10 without any real strength, as there is still not enough demand at higher prices. The institution does not follow the higher prices. MUCH SUPPLY IS ABSORBED. There is still several sellers, but they will sell at higher prices.
Second scenario.
Stock is under exactly the same circumstances, this time however, the price returns to a support line 6 times. The Quota is completely filled,
supply has been forced to sell at lower prices as demand is still not high enough near resistance. The majority of supply is now removed within this range, and price moves up quickly, with large spread and medium volume, everyone now jumps in, price goes much higher then 1.10 as demand continues at higher prices with little supply.
There are literally 10 different other scenarios where i could think of where more support tests would indicate a stronger potential up move. And conversly 10 scenarios where too many support tests would indicate a failure.
The scenarios may also differ in different contexts, ie low liquidity, high liquidity. Whether it occurs over an hourly period, a daily period, or monthly period. The time it takes to move back to support, etc
I could imagine it would be hard to gather statistics on this, but would be well worth while in my mind. Also identifying these different scenarios using price/time/volume.
No the insto will get a crossing done at 70c, or if they really want, at 72c. Conversely if they like a stock and cant get a crossing they will be happy to bid up to $1. The algobot is smarter than a limit buy at 70 hurr durr.
That means the seller is bigger than the buyer? Or do you mean the insto gets their fill exactly? By definition, if you're a big buyer/seller, and you get fully filled, adverse selection! ie. you probably didnt want to get filled there. If a price tests a support level for a while (as opposed to sitting in a proper trading range), everyone will know about the support level. It will be well established and since everyone is ALREADY long from the support level, any moves higher will be met with those taking profits. The momentumn needed to drive up the prices from new/existing buyers simply wont be there.
1. The lower price you mentioned hasn't happened, so how can u call the price that hasn't happened a support entry point?
Lukeaye,
Have you looked at a chart of this to see the support levels?? There were several minor lows of a trading range in July and August of last year at ~ $1.85, there was also the peak of the swine flu scare in April at $1.79.
I called it a place to enter because if it approached there in the right manner that is where I would buy, it's called planning ahead, if it didn't get to this level in the right manner, ie meandering, then I wouldn't bother with the trade. What is so difficult to understand about this??
brty
If you look at a very strong basing period, it can last years
WHAT is the right manor.
Lukeaye,
Why would you want your money tied up for years in something going nowhere?? You don't know it is a basing pattern until it breaks up in price, then holds the gains.
How about this one.
brty
Luke the thing that maybe wrong with you 'bounce off support many times' theory is that it's biased.
If it bounced 3 or 4 time then its also fallen 4 or 5 times from a level not much higher. You are willing to give all the weight to your support but none to the equal yet opposite action.
I could just as easy say, "yeah but your insto is getting smoked by whoever keeps knocking it back at resistance.
Just a thought.
You could always wait for the break either way and trade the re-test?
...like I suck at doing lol.
Yes, BUT, Isnt the retest just support again? The exact place we trying to buy from right now?
The retest could test once, or four times, and then become exactly the same.
Not sure what you mean? If it breaks up, out of that range its in, wait for it to come back and test the breakout, once you know its being supported there and holding, go long??
What does it matter if its "support again"? Better than going long on resistance
What i mean is, its just trading off support again, the same thing as we are doing now, expet we are at a lower level? Is the pullback in biota a retest? or is it a trend change? is it a failure?
So what im saying is, do you think this is a breakout trade anyway? On a larger timeframe it is a breakout already, on a lesser maybe not.
I bought AWC and WPL last Friday, but bailed on both today, because I have an overiding stop of general market risk.
brty
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