CC, Congratulations on a good move in EGY today. I think any system that looks for plays bouncing off a 20 or 50 day moving average will find prospects worth playing where the timing is right.
I had PM'd someone about this scenario earlier today, explaining it was a good low risk trade to look for stocks bouncing off these averages as long as they had the discipline to sell immediately if the price moved across the moving average in the wrong direction.
Isn't it interesting that the 50 day moving average is at $4.41 and the high of the day hit $4.42 and then pulled back? If that isn't a case for TA, I don't know what is.
In looking at the chart I note that the Stochastic was very oversold and thought a bounce like this would have been nothing more than a technical bounce. This type of trade would normally be short term in nature, maybe 2-3 days. However, you have incredible volume today and that changes the character of a stock that was in a down trend. If EGY trades above the 50 tomorrow, I think she's good to go, at least up to $5.00.
A lot of people don't think twice about averaging down which is a very high risk, low reward play. Very few people average up which is a better reward to risk play if done properly. I think if EGY trades above the 50 tomorrow, it's a good place to average up, maybe add 1/3 or 1/2 of a position with a tight stop.
Just my opinion of course, I don't own it here.
stockcharts.com[h,a]daclyiay[d20041216,20050316][pb50!b20!f][vc60][iut!Lah10,30,5!Lp12,3,3]&pref=G
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