Buy Signals Sell Signals: Strategic Stock Market Entries and Exits pdfdrive com

Trading price ranges and buying the dip (Buy low, sell high)
- Buy a pullback to price support in your time frame sell a rally back to price
resistance in your time frame.
- Buy pullbacks to the 50-day simple moving average in growth stocks in
uptrends with a price target back to the previous high price or a rally back to
the 70 RSI.
- Buy pullbacks to the 200-day simple moving average with a price target back
to the 50-day simple moving average.
The whole point of trading a price range is to buy when their seems to be a little
fear taking price back near support, and sell a little greed as resistance is
approached. This type of trading is dependent on the specific market you are
trading and its key levels.
The following example shows how the SPY ETF stayed in a trading range for
the first half of 2015. Support was revisited twice before it was lost, and

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resistance held twice after being established. This is a daily chart, but the
principles can be applied to any time frame.
Previous support and resistance usually hold the first few tests and provide a
great risk/reward ratio for selling resistance short or buying the dip back to
support. The odds of having a winning trade increase if you use other filters.
Selling resistance short has higher probabilities of success if combined with
overbought signals like an RSI of 65-70, while buying support has higher
success rates if the support aligns with a 30-35 RSI level. Once price closes
above resistance or support, then the range is broken and it is considered a
breakout signal. The more times support or resistance is tested, the greater the
odds of it breaking.
Charts courtesy of StockCharts.com.
This example shows that if you are in the right growth stock, the 50-day SMA
can act as long-term support for a position trade to keep you long, your stop loss
if it is lost, and a dip buying opportunity back at support. If you buy a bounce off

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the 50-day SMA, you can take your profits the next time it makes a new high in
price or it becomes overbought.
Charts courtesy of StockCharts.com.
In range bound markets, you are looking to buy dips back to key
support levels to moving averages or price levels before it breaks out
to go higher or lower. Buying dips works in both range bound markets
and uptrends. You are buying fear cheap and trying to sell it when
some greed either takes price back to resistance or to a new high. Dip
buying doesn’t work in downtrends because lows tend to get lower and
support levels are lost. Look for the last place that price bounced to
locate your last support level. Expand your time frame to see if it has
been support before. Find where the buyers were in the past to increase
your odds for buying a dip.