Super Charge Your Profits In The Stock Market
Stop losing to professional traders in the stock market when double tops and double bottoms form. Keep reading to discover how you can make thousands of dollars when double tops and double bottoms form.
All stock market rallies reach a point where bulls say, ok, I've made enough, I'm going to sell and take profits. When this happens, charts will top out when not enough new bulls are coming in to offset their profit taking.
Traders who just bought the stock are pissed off because they came to late. They are trapped, sometimes even in a Bearish Island Reversal. Should they just stay in the stock and hope it comes back or sell for a loss? Well, the stock will keep dropping until enough bulls decide that the stock has over extended itself on the downside. So as more and more of these bulls step in, the stock begins to rise and the rally continues. Now when the stock finally rises back up to its previous high, you can expect sell orders to hit the market as those who were trapped exit their positions.
There are always those traders who were trapped in the previous reversal and now they have sworn to their gods to jump out if the market would just give them another chance by rising to its old high.
A mirror image of this situation occurs in the stock market at market bottoms. The market falls to a new low at which enough bears start taking profits by covering shorts and the market rallies. Once that rally stalls out and prices start sinking again, all eyes are on the previous low-will it hold? If bears are stronger than bulls, prices will break below the first low, and the downtrend will continue. If bears are weaker than bulls, the decline will stop near the old low, creating a double bottom. Technical indicators help decipher which of the two is more likely to happen.
When a stock climbs to old high, you need to ask yourself will the stock breakout above that high or turn down and form a bearish double top pattern. Your favorite technical indicators like the MACD, RSI, and volume will help you answer this question.
When a stock rises to its previous peak, a double top is most likely to form when the volume, MACD, RSI, and stochastics are falling.
Whenever a stock falls to its previous low, it is likely a double bottom will form if the volume and MACD start climbing. - 23310
All stock market rallies reach a point where bulls say, ok, I've made enough, I'm going to sell and take profits. When this happens, charts will top out when not enough new bulls are coming in to offset their profit taking.
Traders who just bought the stock are pissed off because they came to late. They are trapped, sometimes even in a Bearish Island Reversal. Should they just stay in the stock and hope it comes back or sell for a loss? Well, the stock will keep dropping until enough bulls decide that the stock has over extended itself on the downside. So as more and more of these bulls step in, the stock begins to rise and the rally continues. Now when the stock finally rises back up to its previous high, you can expect sell orders to hit the market as those who were trapped exit their positions.
There are always those traders who were trapped in the previous reversal and now they have sworn to their gods to jump out if the market would just give them another chance by rising to its old high.
A mirror image of this situation occurs in the stock market at market bottoms. The market falls to a new low at which enough bears start taking profits by covering shorts and the market rallies. Once that rally stalls out and prices start sinking again, all eyes are on the previous low-will it hold? If bears are stronger than bulls, prices will break below the first low, and the downtrend will continue. If bears are weaker than bulls, the decline will stop near the old low, creating a double bottom. Technical indicators help decipher which of the two is more likely to happen.
When a stock climbs to old high, you need to ask yourself will the stock breakout above that high or turn down and form a bearish double top pattern. Your favorite technical indicators like the MACD, RSI, and volume will help you answer this question.
When a stock rises to its previous peak, a double top is most likely to form when the volume, MACD, RSI, and stochastics are falling.
Whenever a stock falls to its previous low, it is likely a double bottom will form if the volume and MACD start climbing. - 23310
About the Author:
By Sean Phelps. I hope this article makes you a ton of money. For more FREE money making tips go to the wildly popular stock trading blog on the web by going to stock market
posted by Mr. Forex at
11:20 AM
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