Hello Bev,
A slow Norwegian's clouded view --
>>What constitutes the PULLBACK?<<
If you're thinking of going long, it's a reversal from a column of X's to a column of O's. If your thinking of shorting, it's a reversal from a column of O's to a column of X's. The simple 3-box reversal is a pullback. There's no specific number that must be hit to be an official pullback.
>>Should it pullback to the bullish support line?<<
If it does, it makes establishing your stop loss that much easier. But no, it does not need to pullback to the BSL. With extended stocks you would never get in.
A random thought or two: Many words have been written about buying on a P&F pullback. If a stock is trading near its Bullish Support Line, then the pullback buy option is very clear, as is the stop loss point.
But, if a stock is extended and you want to take a position, where in the pullback would you do that? 3 boxes? 5 boxes? A trend line?
I never think about that anymore, because (after a couple of burns) I never purchase a stock on a pullback. Hello -- it's going the wrong way. I don't know where in the world it's going to stop -- no one does. I purchase on a positive reversal after the pullback. One can use a buy stop order or simply wait for the positive reversal and then purchase. (All this assumes a market down approach: Market, sector, relative strength, price objective, risk/reward, a couple MACD'S, putting on the old unwashed socks, taking a swipe at the cat, etc, etc.)
Take care,
Eric |
