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Ann: Resignation of Chief Financial Officer, page-55

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    I am not a TA-focused investor either, and there are no singular and surefire signs of a reversal, but here are some indications.

    What you choose to use also depends on your individual risk tolerance, which is on a spectrum (conservative to aggressive) - you can of course spread your bets over multiple trades too so you don't go "all in" at a particular point. This is some version of the common dollar-cost-averaging strategy.

    a.) Stock stops falling (obvious, but it stops creating lower highs and lower lows on the chart, and at-least starts trading in a range over multiple weeks - V-shaped recoveries are less common). Traders also gauge a nascent change in trend by drawing clear trend lines, and waiting for the price to break clearly out of the trend, which is also a sign that a stock has stopped falling.

    b.) Stock moves above key moving averages (the 50-day and 200-day moving averages, simple or exponential are the most commonly used. The slope of the moving averages also matters - you would want the moving averages to be curling upwards, and for price to be above them.

    c.) You have a big reversal day (price falls heavily or gaps lower, but buyers come in strongly over the course of the day and it finishes near the highs of the day), with some follow through over the few trading days after it to the upside. We saw something like that yesterday, but it was not an obvious and convincing reversal. If such action is accompanied by strong volumes (let's say a good 40-50% above the 3 month average), it is likely to be more convicing.

    d.) You have improving momentum (most commonly followed with the 14-day RSI indicator). You want the momentum over a few weeks to be between an RSI of 50 to 70+ range, which is generally a bullish regime.

    These are just some of the signs, and determining whether a stock has bottomed is as much an art as a science. Usually, you can't pick the exact bottom, and you will have to give up some upside (the first 10-20%, say) until you can find a lower-risk entry to "confirm" a bottom. Of course, the market can throw surprises as well, so if the confirmation is invalidated by the price action, you also have to have a sell-discipline i.e. take a small loss before it turns into a bigger one. Most traders use stop-loss orders to do that.

    Hope that helps.
    Last edited by thunderhead1: 31/05/24
 
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$9.26
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Price($) Vol. No.
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