Trade Entry: Look for Confirmation with These Indicators

I love when traders tell me technical analysis doesn’t work. 

While they’re entitled to be wrong, the fact remains that technical analysis does work, sometimes by up to 80% of the time. Granted, there is no Holy Grail, but if we use the right indicators, we increase our odds of success. Especially if we apply those indicators to well known stocks that may only be down temporarily.

Let’s look at Sturm Ruger (RGR) for example.

In mid-February 2020, the stock plummeted from $56 to $39. However, we knew the stock was far too oversold at its lower Bollinger Band because RSI was oversold at its 30-line. MACD had pulled back too far too fast. And Williams’ %R was below its 80-line.

Once all of those indicators aligned, the stock began to pivot. Then, from March to June, the stock moved from $39 to $74. When I show traders this trick, the immediate reaction is always, “Any one can show me what happened after the fact.” 

Let's take a look at a completely different stock, Canopy Growth Corp (CGC).

Look at what happened in November 2019. The stock ran down from $22 to $15. All four indicators wer oversold and pointing to a bounce back upward. Sure enough, CGC ran from $15 back up to $24. 

Again, there is no Holy Grail to trading. It doesn’t exist. If it did, I’d own my own island already. But if used correctly, this combination of technical indicators can help you achieve the goals you may be after.