Using the 9/20ema rule assists traders with a strategy based approach to entry and exit. As an example we’ve traded NVDA over the past few sessions. With price below the descending moving averages, we assumed overhead resistance.
The daily chart shows price action presently trending upward, with an occasional pause as the stock encounters overhead resistance. Fort we were rejected on Wednesday at the 9ema. Price moved briefly lower. One Monday we removed the 9ema as an obstacle. Tuesday we followed through, finding buyers at the low of the day, producing a lower wick.
From a technical perspective, this is bullish. RSI is rising. MACD is crossing and stochastic is bolting higher. If NVDA moves above the volume by price bands (105.50 +/-) on the left side of the chart, overhead supply begins to taper off dramatically.
A push above 102.63 should light a fire in the stock.
If we reference the 5 minute chart, navigation becomes more clear. Price is currently climbing above resistance levels. Notes on the chart.
Look for this pattern to repeat as we trade “LIVE” today.
Keep an eye on AMD and ADI. Both of these chip makers look ready to bolt higher.
FANG stocks are showing similar setups; NFLX and FB look ready to continue. AMZN looks exceptional. GOOGL traded well using the “Trade of the Day” set up, finding a few profit takers near the close. Reference the 5 minute charts.
MX is another, less expensive semiconductor that we are watching. Note price action on the left side of the chart as price moved above the 9/20ema. This may happen again, if momentum traders hit the stock. Use the “Trade of the Day” set up to gauge entries and exits.
Using this simple strategy, members are grabbing quick profits during the morning session. Whether you are trading an $852 dollar stock like AMZN or a cheap $7.00 dollar stock like MX, the method is the same.
The caveat is remains. Cheaper stocks have fewer eyes on them, therefore anticipate less momentum.
Happy Wednesday,
Vinny
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