When stocks are consolidating near significant support or resistance, this is known as a "point of inflection" when talking technical analysis. A "point of inflection" directly refers to the point at which a trend either makes a U-turn or accelerates in the direction it's going.
We recently mapped out a trade in WUBA where at first it appeared to be basing, consolidating at support as buyers slowly accumulate positions, pointing to a move higher. Judging by the price action yesterday as the markets collectively powered higher, the notable weakness in WUBA is very telling.
It appears that what we initially thought appeared to be a base, was really a bear flag. Trading is all about making adjustments and quickly being able to admit when you are wrong. Looking at it’s recent weakness, further signified by it being a "bottom-right" chart trading under all of its major moving averages, this is a clear short.
Trigger: $44 Stop: $47.51 Target: $35
Do you have balls?
Post 3 charts that are near major inflection points on their weekly chart in the Chart Reading Group Chat.
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