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.
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