Perfect double bottom
Double bed - This model looks like a "W", and occurs when the share price falls at a similar price level twice within a few weeks or months. You should buy when the price passes the highest point in the handle.
In a perfect double bottom, the second decline should normally go slightly lower than the first decline to create a shakeout of jittery investors.
The middle point of the "W" should not go into new high ground. This is a very bullish indicator. It is believed that, after two drops in the stock price, nervous investors will be out and long-term investors will continue to hold on.
Volumes of books have been written about technical analysis - this tutorial just scratches the surface. Technical analysis is one of those areas in which each has a different theory about what works and what does not.
If we can leave you with a practice, it is to back test that strategy will decide to pursue. Back testing means looking back at several years worth of charts to see how a particular stock reacts.
Different actions do different things, so make sure you do your homework first. Here are some points to remember about technical analysis:
Subscribe to:
Post Comments (Atom)
Popular Posts
Powered by Blogger.
No comments:
Post a Comment