Hey Market Pilots,
The week of March 15th, many of the names I trade were approaching their ascending Hourly 50 SMA’s which is a common spot for me to look at buying. This is because, usually, price bounces off that area and resumes the uptrend. But this time it was different, those MA’s didn’t hold, and price continued lower.
So now what? First, you step back and reassess the situation since the initial setup I look for didn’t hold. What is the next kind of setup that could present itself to the long side? After all, I haven’t seen or been looking for short entries because we are not in a bear market. Many of the names that I like to trade have made their way lower to their previous lows, something around the first week of March.
This is presenting an area where price and traders are starting to determine if the previous low will hold, and form a tradeable double bottom. These kinds of formations are prevalent around the markets, as they are a fairly reliable way to advertise that price doesn’t want to go lower. But we always need to be on the lookout for them failing, because after all, price simply is testing a previous low and there are no guarantees that it will actually hold.
With the bullish price action in the indexes at the very end of the day Friday, I would be looking to go long on the tickers which are in double bottom configurations. Let’s ensure that they hold, follow-through, and always with an eye out for a possible failure. If they don’t run, there is no sense for us to hold the bag and this market could be worse off than the indexes themselves are alluding to.
Over and Out,
Your Profit Pilot
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