A picture speaks louder than words.
Here's one stock daily chart and see for yourself - how the stock behaved when it reached resistance - dramatic sell off and this is in 2017 when we are in strong Bull market. The name of the stock does not matter...it's the behaviour that matters
The trading rule is very clear. One should always wait for the stock to breakout before jumping in. Buying in Anticipation of breakout is a very difficult and dangerous game because you never know how long it will take before stock breaks out and to what level stock might pull back. And the most important part: One should always look at the weekly chart to understand the strength of the resistance. Just see below -
The game completely changes once the stock breaks out. It becomes a Buy and Ride play once the stock breaks out. Here's the best place to follow Breakouts
Science of Stock Price Action Premium
There is a logic that stocks follow when they make big moves. I have tried, to sum up, those concepts in a methodology called Science of Stock Price Action.
If you find my work interesting - I will encourage you to buy the book and access Premium Case Studies. The idea is to demonstrate live how patterns unfold and work. They succeed, they fail but the whole process is real fun. I invite you to be part of it.
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