By: Tom Gentile
on August 1st, 2022
Momentum as Seen on a Stock Chart
When looking at a chart one usually tries to assess a direction that the market is trading and tries to determine if that direction can continue or will it stop or at least stall at a certain price area.
If one feels a security can continue it may be because the chart shows momentum in a specific direction, higher or lower.
Momentum is seen as a security’s chart experiencing a series of higher highs and higher lows.
One can draw a trendline connecting the low points and high points and see if that trend ‘channel’ is sloping higher or lower.
Quick Education on Stock Price Resistance
Resistance on a chart is the price point or price area the stock trades to and ‘Resists’ going any higher.
It may see the security roll over or at least stall at resistance before people stepping back in to buy it at the resistance price or more, which would cause what’s called a breakout.
Take a look at the SPY or whatever chart on an index you use to gauge overall market direction and make an assessment, either on your own or with your broker and then decide if you want to trade in a bullish or bearish fashion.
Once you do consider looking at the Morning Reports Lists to see where the call and put options activity is.
App: Toms Option Tools
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Stock and options trading has large potential rewards, but also large potential risk.
You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.
This is neither an offer to buy/sell/ or recommend a particular stock or option.
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