Let's talk about inside days.
Last week, someone here had a nice trade in GERN. GERN gapped up on 7/18 with a high volume, wide range bar, closing up on the day by 26.6%. With this sort of move, most short term traders are going to take profits. Windfall profits like that, in a day, should be taken advantage of.
stockcharts.com[h,a]daclyiay[d20050425,20050718][pb50!b20!f][vc60][iut!Lah12,26,9!Lc20]&pref=G
Over the next 4 trading sessions, price had dropped from a high of $11.24 to a low of $9.53, a drop in price in excess of 15%.
stockcharts.com[h,a]daclyiay[d20050425,20050722][pb50!b20!f][vc60][iut!Lah12,26,9!Lc20]&pref=G
That selling momentum slowed dow today and this is where you look at the size of the candles, or the price range, and see that even though volume was about average, the price range today did not set a lower low from Friday's low.
stockcharts.com[h,a]daclyiay[d20050425,20050725][pb50!b20!f][vc60][iut!Lah12,26,9!Lc20]&pref=G
If one were wanting to go long GERN, you would look to see if price can gain some upside momentum and buy if GERN can trade above $10. If it does, GERN should be able to establish a recent price high.
This is how technical analysis works best. I don't use it to predict future price movement, I use it to show me where a change in the character of the trend comes into play. When the character of the trend changes, it then becomes a higher probability trade.
dabum |
