This trade has already happened but I just wanted to write to post to document how the use of Flying Buddha , when done right allows user to buy at the lowest. Some imagination and risk has to taken as well.
on 161115 about 2 weeks ago, I saw a trendline on linechart formed. At monday’s open Price was resting on this trendline, a decent indication that it is currently at support.
However what gave the propulsion to buy in was also due to a strong downmove on Friday, which created a strong bearish day, and more importantly, created a phenomenon in which price was temporarily too far away from the moving averages.
As price are reversionary in nature , i.e they tend to gravitate back to the MA. this set up a situation in which price has little down space to move, but rather there was BOTH trendline support n mean reversion propulsion to push price up.
True enough, price snapped back the next day, breaking the trend of consecutive bearish days.
Since price snapping back up. it has continued to be bullish. I have closed the trade after the bullish day, expecting it to be countertrend.
So how long a trader wishes to hold in this context will depend on what they are intending to play for.
Do they wish to exit, on the presumption that they have successfully played off on a countertrend move,
or Do they wish to use this chance to rejoin the longer term uptrend?