FTEK Fuel Tech Deep Pullback Trade – Technical Buying Opportunity

by Olivier on February 19, 2014

The market is somewhat choppy and lately trading breakouts has become a challenge. That’s when buying deep pullback plays hitting multiple support can make a lot of sense. That being said , FTEK – Fuel Tech is a stock I highlighted a while back that is now offering such a deep pull-back entry opportunity. FTEK ultimately didn’t break out to the upside and went on to correct all the way down to the moving average 30. No matter how good that buying opportunity might look and no matter how you play it, once you enter you have to decide for a stop loss and sell if the stock keeps going lower. As I outlined in my chart annotations the stock is hitting a support AREA. If you want to successfully play such a move you have to allow for some breathing room. A fixed stop loss is a good way to play this set-up. Decide what kind of loss you are comfortable with and buy accordingly. Then place your stop loss.

Here’s what I like about FTEK right now and why I bought an initial position:

  • First deep pullback after a huge run-up. As they say: Buy the first deep pullback.
  • FTEK is hitting multiple support. MA 30 and former price spikes highlighted by the red arrows
  • Former resistance should now turn into support
  • Volume is decreasing during the pullback. This is technically constructive and bullish behaviour

Click on the chart to enlarge:

There is no denying the stock is acting weak. That’s the downside of buying a stock that is declining. When I see clearly defined strong multiple support and when a stock has been in an extended decline I am sometimes willing to go for it. I use a stop loss and if I get stopped out I simply move on. In any case, as outlined in Ari Kiev’s trading rules: ‘Do not rely on hope and fear in the conventional sense.’

Being preoccupied with not losing interferes with winning. Trading not to lose is not a good strategy. You need to trade to win. – Ari Kiev

Twitter: https://twitter.com/tischendorf

Investing in your education always pays. Learn how to read chart patterns like a pro! Tischendorf Letter Premium: https://members.tischendorf.com

{ 1 trackback }

Comments on this entry are closed.

Previous post:

Next post: