AMD: Key Reversals, and Short-Covering Rallies
AMD has been in a bear market since December 1st, 2022. For those of you who took a short position, you have had to endure three major short-covering rallies. The first short-covering rally which began on December 12th may have made you reconsider your decision to short in the first place, and you probably got out at some point. But when is the best time to get out and possibly go long? Identifying key reversals can be helpful in these situations.
In a bear market, a key reversal is when the price makes a new low but closes on or near the high (the opposite is the case in a bull market). A bar chart can help you see this better. I've placed black arrows under the obvious key reversals on the daily chart. The orange arrow shows a key reversal that may not fit the definition exactly since the price closed just above the middle and not very close to the high.
These rallies only lasted a couple of days each, and since the key reversal can't be identified until the end of the first day, the opportunity to make gains with a long position only lasted one day.
An opportunity to go long has just presented itself on January 6th with a key reversal. I'm expecting a rally on January 9th. The question is, will this rally continue to the upper resistance line, or fizzle out in a day or two and retest the support it bounced off? I'll be watching.
Disclaimer: I am not a financial advisor, and the above statements are not investment advice. My comments are only intended for educational purposes. You are solely responsible for your own trading decisions.
In a bear market, a key reversal is when the price makes a new low but closes on or near the high (the opposite is the case in a bull market). A bar chart can help you see this better. I've placed black arrows under the obvious key reversals on the daily chart. The orange arrow shows a key reversal that may not fit the definition exactly since the price closed just above the middle and not very close to the high.
These rallies only lasted a couple of days each, and since the key reversal can't be identified until the end of the first day, the opportunity to make gains with a long position only lasted one day.
An opportunity to go long has just presented itself on January 6th with a key reversal. I'm expecting a rally on January 9th. The question is, will this rally continue to the upper resistance line, or fizzle out in a day or two and retest the support it bounced off? I'll be watching.
Disclaimer: I am not a financial advisor, and the above statements are not investment advice. My comments are only intended for educational purposes. You are solely responsible for your own trading decisions.
Comment:
What a huge bounce off that support level! A six day rally, and our upper descending resistance line has been breached. I'm expecting the trend to continue for a bit, but if it doesn't, I'll be ready to short on short notice! (Pun intended).
Trade closed manually:
I think we've reached the end of that major short squeeze with a key reversal forming today. It looks like a good opportunity to start thinking about shorting again.
Comment:
There was brief short opportunity. It was a fake-out really, and the rally is back on. There was a key reversal bar today in an uptrend, which I think confirms that the trend will continue tomorrow at least. I think we may be heading for 79.22 by next week if momentum holds.
