The 50% Rule
buy at the bottom and sell at the top, How to trade Uptrend, How to trade down trend, sideways, sell on the news, How to draw trendline
Course: [ Profitable Chart Patterns in Stock markets : Chapter 3. Support and Resistance ]
When a stock, or the market as a whole, has swung violently up or down, professionals look for a "technical rebound” or "technical reaction.” That is, stocks tend to snap back, a third to two-thirds of the way. If stocks have jumped, the quick-trader sells to cash in on profits; if they’ve dropped, the “bargain hunters” rush in. Then, the stock.
THE 50% RULE
When a
stock, or the market as a whole, has swung violently up or down, professionals
look for a "technical rebound” or "technical reaction.”
That is, stocks tend to snap back, a third to two-thirds of the way. If stocks
have jumped, the quick-trader sells to cash in on profits; if they’ve dropped,
the “bargain hunters” rush in. Then, the stock
*The
round number is another common support or resistance level—simply because many
investors set their goals in multiples of ten, or even five.
may
resume the original trend. In longer-range swings, there is a tendency for
support or resistance to develop when the stock retraces half of the ground
won, or lost, in the last move. For example, if a stock has advanced from 20 to
60 without serious interruption and then goes into a downtrend, there’s a good
chance that it will find support at a level midway in the previous advance.
Therefore, half of the 40-point gain, or 20 points, can be subtracted from the
high to find a potential support level at 40.
Profitable Chart Patterns in Stock markets : Chapter 3. Support and Resistance : Tag: Candlestick Pattern Trading, Stock Markets, Support and Resistance : buy at the bottom and sell at the top, How to trade Uptrend, How to trade down trend, sideways, sell on the news, How to draw trendline - The 50% Rule
