AMD: Pullback + Low Volume = Dow Theory 5th Tenet.
Hello traders and investors! Yes, AMD finally hit the 21 ema in the daily chart, which is something we were already expecting since our last study, but is it a good time to buy? We’ll see. This analysis is another real-life example of how to apply Dow Theory in our chart reading.
Last week I said to you and I’ll just quote myself: “I would prefer to see it at the 21 ema , and there’s still a good chance that we’ll see this happening.” This analysis is public, and the link to it is below this post. But there’s something else, as it is not only the 21 ema which is holding the price, but the 50% Fibonacci’s Retracement too. Therefore, we are sitting at a very strong dual-support level, and now it is the best place for a bullish reversal pattern.
The fact that AMD dropped with low volume confirms that the recent drop was just a correction. According to the 5th tenet of Dow Theory, the volume must increase when the movement favors the primary trend, and decreases when the price goes against it. Clearly, the primary trend on AMD is bullish, and drops are just corrections.
Not only the odds favor the bulls, but the Risk/Reward ratio too. The price was above the $ 120 recently, and now it is a terrible time to sell. If I were shorting it, I would probably be buying it back right now at the dual-support level, as the chances of a reversal are high, and there’s not much more downside potential.
In the 1h chart, we don’t have a clear bullish structure, but if AMD defeats the $ 106.17 it’ll bring something new, and might be the beginning of a bullish reversal.
Personally, I’m not convinced that AMD will fly again so soon, and I would rather prefer to see more sideways movement for a while. However, I agree that now it is the best place for AMD to find its bottom and start doing bullish patterns again.
If you liked this analysis, remember to follow me to keep in touch with my daily updates.
Thank you very much!
Last week I said to you and I’ll just quote myself: “I would prefer to see it at the 21 ema , and there’s still a good chance that we’ll see this happening.” This analysis is public, and the link to it is below this post. But there’s something else, as it is not only the 21 ema which is holding the price, but the 50% Fibonacci’s Retracement too. Therefore, we are sitting at a very strong dual-support level, and now it is the best place for a bullish reversal pattern.
The fact that AMD dropped with low volume confirms that the recent drop was just a correction. According to the 5th tenet of Dow Theory, the volume must increase when the movement favors the primary trend, and decreases when the price goes against it. Clearly, the primary trend on AMD is bullish, and drops are just corrections.
Not only the odds favor the bulls, but the Risk/Reward ratio too. The price was above the $ 120 recently, and now it is a terrible time to sell. If I were shorting it, I would probably be buying it back right now at the dual-support level, as the chances of a reversal are high, and there’s not much more downside potential.
In the 1h chart, we don’t have a clear bullish structure, but if AMD defeats the $ 106.17 it’ll bring something new, and might be the beginning of a bullish reversal.
Personally, I’m not convinced that AMD will fly again so soon, and I would rather prefer to see more sideways movement for a while. However, I agree that now it is the best place for AMD to find its bottom and start doing bullish patterns again.
If you liked this analysis, remember to follow me to keep in touch with my daily updates.
Thank you very much!
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