Trade with Conviction - Price Action + MACD + EMAIn the chart above, we can see that the trend resistance and support lines are well established, from where prices have bounced and retreated from on multiple occasions.
After a decent recent pullback, we find the Exponential Moving Averages looking up again, almost ready for a Bull Cross.
I personally prefer 9,21 Days EMI for trading in a short time frame of 7-10 days. It can be easily seen that on numerous attempts, price has kept these EMA levels.
MACD and RSI play an important role to confirm the hunch from the preliminary screening off the Support & Resistance and EMA lines.
I try to watch out for where the RSI levels are moving toward and the key levels from where it bounces. Personally I find the 50-60 region safer, after rising from a lower level, as it not just implies that bulls are back in control, but it also leaves decent room for upside movement and gain from the share.
MACD helps to now time this entry right. If its clear that the divergence levels are reducing and the lines are closing in for a Bull Cross, I can form a decent opinion if I want to wait for the cross or enter while the divergence is still decreasing. Most of the time, I enter right before it is all set for a Bull cross. It helps me to get an early entry and close my position in a day or two if the MACD cross is rejected, this keeps the losses to a minimum.
Finally, Volume surge serves to further strengthen the view that the increase in price is accompanied by smart money flowing in, and now you know that this price increase will have a sustained increase with momentum. EPS and Financial position of the company seem good, and that checks out all the major points for a long position.
To summarise, watch out for EMA and Resistance Support levels to screen stocks preiminarily. Out of the selected bunch, review the RSI and MACD levels. Increasing Volume with Price increase always helps. Check the EPS growth at least, and set the targets and stop losses as per your risk appetite.
Thanks for reading :)
