There is a decoy on GCM Resources (LSE:GCM). In fact, this is an ominous trap for unwary traders who make decisions based on emotions. The dominant bias on the chart is southwards, and there is no end in sight right now. It is presumed that speculators are aware of the fact that a bias alternatively has significant movement zones and transient counter-trend zones.
2 Exponential Moving Averages – EMAs 10 and 20 are used for this analysis. Yes, the market has been trending downwards for the past several months. Right now, there is a significant Bullish Engulfing Pattern candlestick (something that might be a spike or a great opportunity for bears to go short at a higher price). For those who think this is a ‘buy’ opportunity, this may well be a death trap. For the bears, it portends a low risk and a high probability chance.
Can anything go wrong here? Yes. Should the EMA 10 cross the EMA 20 to the upside and should the price close above them and continue to move upwards, then the bears could smooth their positions. No negative or positive trading periods - only periods when the markets go in your favor or go against you as that is true of any strategy. Truncating profits before they go too far and taking losses only when they seem to go out of control is a recipe for pecuniary disaster.
This article is ended with the quote below:
“Change comes from facing fears, doing something differently, and getting outside of your comfort zone. But, you can’t do differently without thinking differently. Becoming self-aware is crucial to your development as a trader.” – Dr. Woody Johnson
Azeez Mustapha
Market Analyst, Trading Signals Provider and Coach
Ground-breaking lessons from expert traders: http://www.harriman-house.com/experttraders
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