Our Trend Following Charts and Analysis

Our #TheSTRAT Charts and Analysis

Let’s talk about human psychology towards weather

The researchers note that it should not be surprising that weather and seasons affect human behavior, given that humans have evolved with seasonal and weather changes since the dawn of the species.

The researchers offer a straightforward prescription: "If you wish to reap the psychological benefits of good springtime weather, go outside."

Therefore,  we at lucid-trend come up with emerging sun as our bullish breakout symbol to represent an optimism in stock price momentum after a bearish price behavior. Prices have just managed to overcome and break above the previously set resistance. 

Simply put, smart money thinks the stock is going higher from here and moving towards a bull run . 

When does Bull Breakout condition happen?

When a stock price moves higher and performs a significant close of the day meaning the low of the day is higher than the key resistance level identified by our trend following system.

This condition occurs at the top meaning after the bull pulls back or happens at the bottom when a stock has established a solid bottom.

In both of the above-mentioned scenarios, the market is range-bound. We encourage our users to pay attention to and visualize technical chart patterns such as head-and-shoulders, cup-and-handle that are near completion in their formation and signify major breakout.

When the price is approaching the upper end of the range, savvy traders prepare for a price breakout above the upper range resistance level. In order to identify this type of opportunities we have created a BEP Resistance level scan

What to watch out for.

Make sure, the stock has a good reason to trade at higher prices or technical reason to move higher.  

In my experience, I have seen stocks breakout for the wrong reasons and fail to conclude in a bull run.

One of the classic wrong reason is a small headline or PR exercise by heavily shorted stock, makes some traders panic. This situation leads to trader chasing the stock in order to close their position.

Some traders may not be panicking but may have purchased stock on margin. In this situation, brokers may be making a margin call and forcing traders to close their position.

This type of scenario flips the demand and supply in the frenzy and prices end up above the resistance line and end up in a false breakout!

Ultimate outcome

If the growth remains good and stocks outlook is restored to being bullish it will establish a bull run. Our trend following methodology will identify this type of bull run condition as "The sun" . 

If the outlook is questioned, prices may experience a hurdle to escalate any higher. This indicates the stock experiencing a pullback. Our trend following methodology will identify this type of condition as emerging clouds .

If a major accidental outcome is having a twister condition , when the stock suddenly starts dropping, it points to panic, as the bull thesis has evaporated and there is no better outcome as once anticipated.