This shows how to find entry positions after a fine stock drops a lot in a short time (picture below).

1, 2) A 20+% drop in price in a month.  ACI is a fine company, so this is an excellent time to look for some quick gains while the stock recovers.  Notice how the price dives sharply below the 20 MA. Relax and wait for the price to come back to that 20 MA.  The -DI (red line) goes far above the +DI (green line) (of the DMI / ADX indicator), confirming the steep down trend. 

3) Price formed a base, and is making a new minor low. This is not a good time to enter a trade with confidence.  Stochastics and MACD are too high and of no help. The blue ADX line of the DMI indicator is still too high, which indicates the down trend is not over.   The -DI and +DI lines have not yet crossed over once. The minor low occurs while the down trend is still in place, so not a good time to trade.  Notice you would have gotten a nice gain IF you had entered a trade, which says that the stock is eager to recover from the 20% previous drop.

4) Price makes a new minor low.  This time the indicators look better, and this is a good time to enter a short term trade with high probabilities of success.  Stochastics is low, with fast stochastics crossing over slow stochastics.  MACD is basing around the zero line.  The +DI and -DI lines have been hugging each other, signaling hesitation.  MA's are squeezed (see brown Squeezed MA indicator line) indicating the trend will change.

5) After all the excitement of several quick jumps in price, the stock made a base again for a month or so and then suddenly broke out.  This is a good looking breakout with a high probability of further increases in price.  Great breakout volume.  The MA's were nicely squeezed.  The stochastics crossed over at a low point.  The MACD turned the corner around the zero line. Nice cross-over of the +DI and -DI lines.  Look closely at the blue ADX line of the DMI indicator.  It has been steadily declining for more than 2 months, and is coming up from a deep low.  This shows that the previous trend totally lost steam, and it's time to start a new trend, in this case an up trend.  Everybody on board!