Best practices for determining when a move is exhausted

[eveningtrader]

Everyone is different. For me, it's price action. I use my indicators to confirm my reason why the trade is a high probability trade. Market will go where it wants to go.

Using TASR to illustrate my point. The chart is for the period of February 2004. It has 3 splits after that, and the splits added up to be a 12:1 split.

On 2/3/2004, TASR opened at 150, then giving all the gain back, and closed at 127. The next morning, it opened at 120. That's 20% from the high, I cannot tolerant something like this. But for those with ball of steel, the stock shot up to 200, a 67% gains in the next 6 sections. It didn't stop there, by Mid April, it's almost at 400.

Quote from Worldcrusher:

In the hopes of focusing on the technical analysis of a move's strength, as opposed to aspects of trade management, have you observed any kind of highly reliable technical signals to ascertain move exhaustion?

Sincerely,
Daryl

 

[Worldcrusher]

Quote from eveningtrader:

Everyone is different. For me, it's price action. I use my indicators to confirm my reason why the trade is a high probability trade. Market will go where it wants to go.

Using TASR to illustrate my point. The chart is for the period of February 2004. It has 3 splits after that, and the splits added up to be a 12:1 split.

On 2/3/2004, TASR opened at 150, then giving all the gain back, and closed at 127. The next morning, it opened at 120. That's 20% from the high, I cannot tolerant something like this. But for those with ball of steel, the stock shot up to 200, a 67% gains in the next 6 sections. It didn't stop there, by Mid April, it's almost at 400.

Great example, Eveningtrader!

Looking at the image you included with your last post on this forum, price made a swing high and then retraced, as you pointed out, from the high. When it does, it comes back to the red moving average (not sure of the time period) forms several small, compressed bars indicating support at that level, and then takes off. This is one of my favorite setups for a reversal! In this case, price action (as it often is) at the price level of the ma was a powerful indicator! Hopefully, this forum will produce many more similar examples!

Thanks again,
Daryl

 

[Worldcrusher]

Quote from Spydertrader:

FTT = Failure to Traverse

- Spydertrader

Thanks, Spydertrader! I really enjoy reading your posts and forums as they are a great resource.

Sincerely,
Daryl

 

[acronym]

Compressed bars are a good sign, but they dont tell the whole story, it depends on the instrument.


Its a classic sign, but is too easy to read-
it has to be backed up, preferably, with a spike (that would be a ridiculous high, and a much lower close, a bearish candlestick) into uncharted territory to consider the "sudden disinterest" of some low range bars to be considered sell worthy, particularly with heavy negative indicator divergence.

Just a thought, it equally true something may just topple from a collection of small range bars, but you dont know for sure till it happens, and you may as well be looking for the best value in it.

I neglected to mention, the reverse is true for buys etc. Find value, if nothing else, technically.