Wednesday, April 08, 2020 2:59:13 PM
DGAZ when is it safe to catch a falling knife.
Today there were 3 options
1. Buy on the close above a trend line as long as it is above the VWAP and the RSI is above 50 and a bullish MACD. The biggest risk on this trade is that the stop loss needs to go all the way down below the last swing low which is a big R/R
2. Wait for a pullback halfway down the big green candle. Risk now at this point is 50% less than buying the actual break out. Problem is that you don't always get the pullback.
3. Wait for more confirmation such as a consolidation pattern like the trend line break (red line) with a MACD established above zero.
Today there were 3 options
1. Buy on the close above a trend line as long as it is above the VWAP and the RSI is above 50 and a bullish MACD. The biggest risk on this trade is that the stop loss needs to go all the way down below the last swing low which is a big R/R
2. Wait for a pullback halfway down the big green candle. Risk now at this point is 50% less than buying the actual break out. Problem is that you don't always get the pullback.
3. Wait for more confirmation such as a consolidation pattern like the trend line break (red line) with a MACD established above zero.
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