Stock Trading - How to Tell When the Market Has Put in A Bottom
February 13th, 2008 by admin
How do you know when a market has stopped falling and is ready to turn around and go back up? How do you tell when the market has bottomed? There are several techniques, and I will share them with you now.
1) You need to look at price and volume. The simplest way to tell that the market has bottomed is simply by looking at bars that get huge amounts of volume.
If the market has traded down very far but close up higher than the close and there is heavy volume that is a very strong clue that the market may have put in a bottom.
2) Has the market gotten choppy, like its hit an invisible glass floor? If so look back in the chart’s history. Has there been any other support or resistance in that area?
If so, then most likely is resting on that again. Wait for the price to break up, and there is your confirmation that the bottom has been put in. In fact what I just mentioned is the most important thing. If the market has put in a bottom, the best way to tell is to let the price tell you that by going up and staying up.
There is nothing worse than trying to catch a falling knife. You will cut yourself. The same is true of the market. You don’t need to pinpoint the exact bottom. You just need to find the place where it has turned around. You know for sure that it has turned, when it has turned. (Kinda obvious, huh?)
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Posted in Stock-Market-Tips, Stock-Trading-Online |