RE: Technical analysis, Part 2: Valirx12 Oct 2020 08:54
I use the 20, 50 and 200 day MAs as well.
At the begining of the year I was posting that the sp had been below the 200 day MA for petty much 100% of the time i.e. there was a stomg downward trend and I used this along with other arguments to militate for regime change. It was great that Freddie and ValJu were able to effect that regime change.
After regime change the sp started to rise, but I argued that there was still a lot of risk as we hadn't even been able to maintain a sp level for 20 days.
My use of the 20 and 200 day MAs helped me prevent taking unnecessary risks, however others who had averaged down in 2019 or brought in at the 3.5 to 7p (i.e. taking a risk I would not take) had brought shares at levels that would have resulted in fantastic gains.
I also keep an eye on the candlestick length. The longer the greater the buying or selling pressure. I used this a couple of years ago when I made a nice % gain on sclp. The price was going up but the candlestick bodies were getting shorter. On the Friday the candlestick body was short, I sold and I made a profit and I thought I had done well. When Monday came the price shot up furher and the candlestick body was longer again. (wick length is also interesting, it's an element that makes dragonfly and gravestone doji interesting).
The ponit is that graphical analysis is a useful tool and can be very helpful to help manage risks and help people walk away with profits rather than losses, but they do not predict the future. Of course those better versed in their use might have more profit than me under the same circumstances. I would recommend googling candlestick analysis, even a simple google search comes back with informative results. Looking forward to a good day today.