We have a little bit of a bounce going this morning, but it is far from a high energy bull party. So long as yesterday’s lows hold, many bulls will be celebrating. However, the reality is that we could just as easily be working off oversold conditions before we head even lower. In situations like these, I like to trade stocks where I have easily defined parameters regarding stop losses and whether the trade is worth sticking with.
I have included two examples below. Note how each chart has seen price already pull in to support, consolidate, and then turn back higher. If, indeed, the market has bottomed, then these types of plays should lead. If, however, the market has another leg lower in store, then we have well-defined lines in the sand to quickly get out.
See Also: The “Easy” Trade Setup
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