ATMASphere Aug 2014

Tip # 2.
Analyze swing points
Swing points (some call them "pivot points")
Are those areas on a stock chart where important short term
reversals take place? But not all swing points are created equal. If
fact, your decision to buy a pullback will depend upon the prior swing
point. Here is an example:
Look at the area that I have highlighted in green. You may have
considered buying this pullback. Now look at the prior swing point
high (yellow highlighted). There are two problems with buying this
pullback. First, there isn't much room to work with! The distance
between the pullback and the prior high is too small. You need more
room to run so that you can at least get your stop to break even.
The second problem is this: The prior high (yellow area) is composed
of a cluster of candles. This is a strong resistance area! So, it will be
very difficult for a stock to break through this area. Instead, look to
trade pullbacks where the prior high is only composed of one or two
candles.
AUGUST 2014
ATMASPHERE | 9