There are times when we are too bullish on a stock, expecting a breakout or some wild ride ahead. But at the end of our eager anticipation is a deadly trap.
Take a look at OV.
OV had been consolidating inside the darvas box for two months and everyone was expecting a breakout.
Breakout occurred with the price piercing the upper end of the box. But the next day, candlestick registered a doji which indicates indecision among the crowd (PD: I bought at the doji.hihi..). This implies that the breakout could not be sustained. The next three days confirmed it, with the candlesticks piercing the box’s lower end.
We can also see that during consolidation, MACD and RSI showed bearish divergences which imply that the impending breakout could be weak.
Being a newbie then, i know nothing about all these warning signals. I didn’t cut and still was an expectant bull. But in the end, i was..
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