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 Chart by www.freestockcharts.com A knee-jerk reaction for a lot of people is probably: short it! And that would be a pretty good answer. However, it is not the best answer. To understand, let's go over some Swing Trading principles first:
What is the current short-term trend, which is often defined as the 30 day trend? That's correct, it's up. The 30 day regression line gives a good indication of that up trend, that line is sloping up. The short term channel around the price is sloping up. This means, any time the short term trend is up, you're going to look for long entries and ignore all shorting opportunities because if you short in a situation like this you trade against the short-term trend, and you will decrease your odds of success. Yes, you might make 5 - 8 % shorting the stock right now, but you might not. The odds favor that you will not make that much, but instead make a few percent. Stochastics is starting to go down, showing that the previous short-term uptrend might be over, and the stock might go in a short-term downtrend. However, remember that in an uptrend, the overbought stochastics is fairly useless, as you can see, stochastics spent more than one week in oversold territory. Do not rely on oversold stochastics during or at the end of an uptrend. MACD is confirming that the price is starting to go down. +DI made some nice pivot highs above -DI and the +DI pivot highs were higher than the most recent -DI pivot high. This is bullish and shows promise for the current short-term uptrend to continue. Conclusion: Short-term uptrend, price is heading down for a leg down. Expectation is that the price will head down to the lower parts of the channel, but this is not guaranteed, it might start going back up sooner. Wait for stochastics to make a bottom, for MACD to make a bottom, and buy long as soon as that happens. Watch +DI and -DI, if +DI dips below -DI, and then swings back up above it, it confirms a new leg up has started. |