Trading Rule: Bullish stock has a tendency to hold long term moving average like 200 dma
Fortis is at 200 dma
Is Fortis a Bullish stock?
Yes, Fortis made a large candle Bullish move earlier in Feb 2015. The stock is up 55% YTD. A large candle Bullish move has capacity to change the trajectory of the stock.
Has Fortis respected 200 dma post Bullish move?
Yes. Last time when Fortis was at 200 dma - the stock managed a strong bullish bounce from 150 to 180 in less than 5-7 trading sessions. The stock is now back to 200 dma. Technically, it should hold
What IF stock breaks 200 dma?
There is also a possibility that stock can break 200 dma on closing basis and in the case the above rule will be considered failure. In market, we are dealing with probabilities and not certainties. Fortis on breakdown below 200 dma can become trendless to neutral. It then can slip to 150 and even to 135....where it has the most solid support.
Please share your comments on what you think of stock observations, market and trading in general. Please do your own due diligence before trading or investment. Do not treat the above as any recommendation.
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Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers