@jprado takes the spot for this week’s featured trader as he uses multiple technical indicators to support a potential upward movement in the price of $MWIDE! Using multiple indicators in trading can provide a more comprehensive picture of market conditions and increase the likelihood of making informed trading decisions.
With his excellent use of the Darvas box, exponential moving averages (or EMA), and the relative strength index (also known as RSI), @jprado managed to affirm multiple signs of a bullish direction and catch $MWIDE’s recent surge in price. As predicted, $MWIDE’s price increased to a peak of around 33% since his post.
Let’s take a look at how @jprado used these indicators to his advantage.
In his post, our featured trader stated that the stock was in the middle of a Darvas box, above EMA 50, has an RSI above 50, and an undecided MACD. He stated that the stock has a possibility to go sideways due to the price being in the middle of a Darvas box (which means that the price of the stock is trading within the boundaries of the box) and having an undecided MACD. However, with a good catalyst and being able to break resistance, he still saw the potential of a breakout due to the bullish indicators of EMA and RSI, which can be further confirmed when the stock price breaks out of the trading range and moves above the upper line of the Darvas box as it would then generate a buy signal.
At the time of his post, $MWIDE closed near its low at the 3.25 level, even going as low as 3.12 due to the decrease in price on the following day. The stock started to truly accumulate in price 6 days after it broke out and reached a peak of the 4.33 level, resulting in around a 33% increase since his last post.
TECHNICALS OF THE TRADE
Let’s elaborate on the three main indicators he used: the Darvas box, EMA, and RSI.
The Darvas box is used to identify strong trends and to trade only in stocks that are in strong up trends. Traders using the Darvas box method typically look for stocks that have established a trading range, meaning that they have been oscillating within a defined price range for a certain time. As we can see in $MWIDE’s chart, the stock has been ranging for months, making the Darvas box an appropriate tool to utilize.
He also mentioned that the price is above EMA 50. When a stock trades over its 50-day EMA, it signifies that the current price is greater than the average price over the previous 50 days. This may be taken as a positive indicator, suggesting that the stock is in an uptrend and that it is likely to continue.
@jprado stated that the RSI of the stock is above 50, which generally indicates that the security is in a bullish (upward) trend. Additionally, the line he drew in the RSI indicates that the price of a stock and the RSI is moving in the same direction, which is considered a sign of confirmation of the trend.
While utilizing numerous indicators might be advantageous, it is also vital to apply them methodically and logically. Overloading a trading strategy with too many indicators can confuse and even worsen decision-making.
FUNDAMENTALS OF THE TRADE
Megawide is one of the Philippines’ largest engineering and infrastructure organizations today, having a significant portfolio in Engineering, Procurement, Construction, and Transportation-Oriented Infrastructure.
Its ground-breaking construction and engineering solutions create new industry standards by combining first-world EPC skills with cutting-edge construction technologies such as precast, formwork systems, concrete batching and construction equipment, logistics, and services.
It recently joined the list of the Philippines’ 2023 Top Employers, where it stated that Megawide maintains employee trust by giving competitive perks and opportunities for personal advancement. Apart from being an active partner in nation-building, Megawide is also committed to continuing to establish a community that values its employees’ ideas and supports a good work-life balance.
WHAT SHOULD BE MY NEXT MOVE
Currently, $MWIDE is creating a new resistance around the 4.2 levels. The RSI is also exhibiting overbought signals, which indicates the possibility of a retracement. Due to this, it is advisable to reconsider strategies and enter a potential pullback. However, waiting for a pullback does not always result in a good trade, and traders should always apply adequate risk management strategies as well as evaluate other kinds of research, such as fundamental analysis, before placing a trade.
Once again, KUDOS to @jprados for being this week’s featured trader! Enjoy your 14-day InvestaPrime Access and continue to be an inspiration to the trading community.
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