Stock Trading Education - Trading tactics & examples

Trading Strategy: Buy Setup (BS - at least 2 days down), Bottoming Tails (BT), and Bullish Changing of the Guard (+COG), in the Buy Zone (BZ - area between rising 20MA and 40MA, where 20MA is above 40MA). CEG is in a powerful Stage 2 on the daily chart, as shown by the series of higher highs (HH) and higher lows (HL). It has sold off for four days, before the bulls took over control as shown by the +COG. Also interesting are the three BT were all in the same general area, showing demand underneath. Although not shown, the hourly chart closed with a bullish bar on increased volume (+Vol.), a bullish sign. Finally, the BS and BT occurred in between the rising 20MA and 40MA (BZ), where strong snap-backs often happen.

chart courtesy of Mastertrader.com

Tip: A Buy Setup with multiple Bottoming Tails, in the Buy Zone, is a powerful combination suggesting a tradable bounce over the +COG.

The Play: Buy over previous day's high, with a protective stop under previous day's low.

NOTE: If some economic news, that can cause additional volatility, are supposed to be out that day, raise the stop to the 30-min. low after the their announcement.

Objective: Target in the area of $30. MEDIUM RISK

Play Review:

CEG rallied 5 trading days in a row, surpassing the target.

Trend Line Buy Setup         BT at Rising 20MA