LSE:ABC broke through resistance after going through a period of consolidation and now looks like it wants to retest the support/resistance level.
This stocks has been trending well since July 2014 and although the trend is consistent, this stock does experience periods of deep pullbacks.
When trading a stock with deep pullbacks the trader has to bear this in mind because there will be times when the trade will be in profit
then the profit will be taken back during the pullbacks so there may be a battle of the nerves to hold on until the trend resumes.
Pullbacks are a part of trading and we may prefer to take trades with small pullbacks, but as Abcam has been a consistent growing stock
this can be an exception because over the long term this stock can hand out generous amounts of profit.
You can notice on the daily timeframe that this stock has moved down all the way to touch the 200 simple moving average in the past.
We want a trend to use the 50 simple moving average as support in an uptrend and as resistance in a downtrend.
The fact that this stocks touches the 200sma shouldn't concern a trader as these can be areas to enter a pullback trade,
just as long as the higher timeframe is going in the same direction.
Price is currently above the 50 & 200 simple moving averages on both the Weekly and Daily timeframes so it is showing signs
of continued strength.
One thing to also note is that although a stock may have deep pullbacks, the behaviour of the stock can change over time and
start producing smaller pullbacks so that will be something to watch out for here.
If this stock is traded as a breakout then the stops should be placed wide to account for the deep moves.
At the moment price looks like it is coming back to retest the resistance level it broke through and may use it as support,
and this will become apparent in the near future. If the support area does not hold then we may see price return back
to the consolidation zone.
Any comments or questions, do not hesitate to leave them below. Hit agree if you share our sentiments!
Sublime Trading
This stocks has been trending well since July 2014 and although the trend is consistent, this stock does experience periods of deep pullbacks.
When trading a stock with deep pullbacks the trader has to bear this in mind because there will be times when the trade will be in profit
then the profit will be taken back during the pullbacks so there may be a battle of the nerves to hold on until the trend resumes.
Pullbacks are a part of trading and we may prefer to take trades with small pullbacks, but as Abcam has been a consistent growing stock
this can be an exception because over the long term this stock can hand out generous amounts of profit.
You can notice on the daily timeframe that this stock has moved down all the way to touch the 200 simple moving average in the past.
We want a trend to use the 50 simple moving average as support in an uptrend and as resistance in a downtrend.
The fact that this stocks touches the 200sma shouldn't concern a trader as these can be areas to enter a pullback trade,
just as long as the higher timeframe is going in the same direction.
Price is currently above the 50 & 200 simple moving averages on both the Weekly and Daily timeframes so it is showing signs
of continued strength.
One thing to also note is that although a stock may have deep pullbacks, the behaviour of the stock can change over time and
start producing smaller pullbacks so that will be something to watch out for here.
If this stock is traded as a breakout then the stops should be placed wide to account for the deep moves.
At the moment price looks like it is coming back to retest the resistance level it broke through and may use it as support,
and this will become apparent in the near future. If the support area does not hold then we may see price return back
to the consolidation zone.
Any comments or questions, do not hesitate to leave them below. Hit agree if you share our sentiments!
Sublime Trading