Learn how to use PowerRatings with Fibonacci retracements
One of the great things about
PowerRatings
is that they can be used in so many different ways. Once you
understand the basics, you can combine them with a myriad of trading styles.
Each day I’m going to highlight some of the different ways you can incorporate
PowerRatings
into your existing trading strategies and hopefully teach you a few new ones
along the way. I’ll also show you some of the ways our members are using
PowerRatings
to improve their trading.
In today’s example, let’s take a look at Palm
(
PALM |
Quote |
Chart |
News |
PowerRating).
PALM bottomed in the first week of November and
has been in a steady uptrend since. During that time, PALM went from a low of
$24.50 to a high $41.14 (a 68% return in less than 3-months) without any
tradable pullback. This can make it very difficult to find a suitable
entry point and lead to a rash decision to buy at precisely the wrong time. If
you find yourself making this kind of mistake, don’t worry as there are tools
that can help you avoid repeating them in future.
Waiting for a stock to pullback and then register
a high (7-10)
PowerRating
will give you a statistical edge that will
dramatically increase your chances of a profitable trade. Plus, you need not
rely solely on
PowerRatings,
you can combine them with your favorite indicators to improve your trading
rather than have to learn a whole new approach. Here’s PALM’s chart:
PALM fell from $41.14 to $35 in 8-days (a 15%
decline). This decline took PALM to its 38% (Fibonacci) retracement level of the
November – February advance. PALM registered a
PowerRating
of 7 the day of the low — indicating a high probability that it will rally over
the next 5-days.
You can also see that the 5-day RSI hit almost
exactly the same level it did in January after undergoing a pullback. The
January and February RSI peaks are also at the same level, suggesting that PALM
is behaving in a pretty consistent manner while still in an uptrend.
The combination of these three indicators creates
a very high probability trade, and as you can see from the chart PALM has
rallied by more than 10% so far.
Click here
to take a free trial of
PowerRatings.
You can also
attend a free
class on how to use
PowerRatings
presented by Steve Primo, our Director of Education.
Ashton Dorkins
Editor-in-Chief