Follow Technical And Psychological Rules When Selling Into A Bounce

by Olivier on February 12, 2010

As of yet my plan is still to unload or at least further reduce my MXI.V – Merrex Gold position if the stock can manage to bounce. I have written about how important it is for a stock to act as you would expect. This is the sign your analysis is correct and your timing was good enough to make money. MXI.V has now started to behave like I would expect it to behave. The recent gap is acting as support and the stock is bouncing off that support area. If you look closely, the past few days contain more white candles than black ones. That in itself is usually a sign buyers are in control or starting to get back in control.

MXI.V Merrex Gold Hitting Support

Up-to-date MXI.V – Merrex Gold Chart on my public list.

My point is: Whenever you plan to sell into a technical bounce watch the stock’s strength very closely:

  • If the stock displays more strength than you’d have expected sell less than originally intended.
  • If the stock is acting weaker than you thought be more aggressive reducing your position.

There is no way to know beforehand what the right thing to do will be. That would be too easy. What you can do though is to be alert and nimble. Be willing to adapt to a new situation if a chart tells you to do so. Let’s see if MXI.V can challenge the resistance area around 0.75 and if it does, how it will cope with it.

Trade the charts, not your opinion.

Have a great evening!

{ 1 trackback }

Comments on this entry are closed.

Previous post:

Next post: