Here is a very simple way to determine whether I want to be long or short an index or stock. First thing I do is look at the Point and Figure chart. I want to make sure its in a strong uptrend . Secondly I want to know what the price objective is. Normally I would use a close say 2 boxes below the uptrend support as a stop loss. As long as the price objective is at least 3 times as large as my risk then I would consider the odds in my favor to take the trade. Of course there may also be logical stop loss areas other than the uptrend line on the point and figure chart. For the BKX I would say any close below the Mar 13 low would probably be a logical stop. Next I bring up a weekly chart. Now if I can stand on the other side of the room and tell that the 3-4 year trend is up and the asset is above the 40 week moving average so far so good. Last and least important I will look at the daily chart to see if the stock or index is still making higher highs and higher lows. You can play reversals but you will have to withstand larger drawdowns. I just prefer to have the momentum already heading up myself. Pretty simple. Of course all of this is dependant on having a current COT long signal.
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