Yesterday I showed a chart of YRCW that I captured during market hours. It was a fairly simple and low risk setup.
Very quickly the stock popped higher like expected; however, the question is, is it really that easy?
While you might not always see such immediate results, the answer is yes!
You can see the below and after charts below…
You can clearly see the play was to try and capture a bounce off the recent consolidation (sideways movement), which just so happened to coincide with prior support levels.
What makes this setup special though is the giant swing higher followed by a low volume pullback. Remember that volume plays an important role in justifying moves. In this particular case, volume on the original huge upswing was partnered with a massive volume level that hasn’t been equaled on any move since. I generally take that has a sign that the stock should come back to those higher price levels unless there is larger volume on a swing downwards.
So now we see the stock did indeed bounce off the support line like we planned. Depending on your risk and own trading situation, many might considering taking profits and running.
If you plan to keep holding or even get into the stock, the next move is crucial. The movement on our trade came on considerably strong volume, so if we head higher from this point, then you can consider entering into this stock, with a stop on a close below prior market opening price ($4.63).
In all actually, it took you longer to read this article then for me to find and execute this trade. If you want to find stocks like these, then let me teach you my trading strategy and other technical analysis skills, patterns, and indicators.