Buying in anticipation of range expansion | stockbee


Buying in anticipation of range expansion

CHE was a stock highlighted couple of days as in range contraction zone (RCZ). I bought it on that day in anticipation of possible range expansion and it had range expansion yesterday.

As I have explained in last couple of days stocks undergo range contraction and range expansion. Buying in range contraction zone in anticipation of range contraction can give you a low risk entry as you can quickly move your stop to break even on first range expansion day.

However not every range contraction zone immediately breaks out and also there is no guarantee it will resolve to upside. From range contraction zone the stock can also have range expansion in opposite direction.

No comments: