at a high, sold off, and then returned to the opening price. In
my experience, dragonflies are fairly infrequent. When they do
occur, however, they often resolve bullishly (provided the stock
is not already overbought as shown by and
indicators such as stochastics). Here's an example of a
When assessing a , always take careful notice of where the
occurs. If the security you're examining is still in the early
stages of an uptrend or downtrend, then it is unlikely that the
will mark a top. If you notice a short-term moving
average crossover, such as the four-day moving average
heading above the nine-day, then it is likely that the marks
a pause, and not a peak. Similarly, if the occurs in the
middle of a , then it is likely to signify a pause
rather than a reversal of the trend.
As significant as the is, one should not take action on the
alone. Always wait for the next to take trading
action. That does not necessarily mean, however, that you
need to wait the entire next day. A large gap down, after a
that climaxed a sustained uptrend, should normally provide a
safe shorting opportunity. The best entry time for a short trade
would be early in the day after the .
I am not a financial advisor nor am I giving financial advice.
I am sharing my biased opinion based on speculation.
You should not take my opinion as financial advice.
You should always do your research before making any investment.
You should also understand the risks of investing. This is all speculative based investing.