Potential bottom? Trend Reversal?
Greetings.
I'm bullish on RKT and currently have a LONG position in the stock. I notice there is divergence between the Volume Weighted Moving Average ( VWMA ) and the Exponential Moving Average ( EMA ), both of which are configured to measure 14 days of price action in this daily chart . I interpret this divergence as bullish and a potential signal to an emerging upside trend for the following reasons:
1. VWMA measures (closing price + volume ), while EMA measures (closing price only). VWMA emphasizes volume , and volume is a key indicator of the (strength) of a trend. Currently, volume is decreasing, while price is making higher highs, hence the rising VMWA. In contrast, the EMA is only measuring the average closing price of RKT in the last 14 days (3 weeks), and indicates that RKT is trending down, which is obvious to the naked eye. I interpret the decreasing volume as weaknesses in the current down trend, and the rising VWMA as a signal of a potential reversal.
2. RKT formed a bullish cup & handle signal in the month of August and hit resistance on 2 Sep at 34.41 before retracing nearly 35% to the current price. Based on the 1:1 minimum price target ratio theory, I anticipate a long-term minimum target price of $42, based on the C&H pattern.
3. Volume is decreasing while price is moving sideways, which indicates a period of consolidation, before a new trend begins - either to the upside, or to the downside.
4. On 2 Sep, RKT beat earnings by 2304%, which I interpret as strong fundamentals for a company that just IPO'd o/a 06-Aug.
If price breaks and closes above the 14-day EMA with strong volume acting as confirmation, then I interpret this as a LONG signal with an initial target of $28. Of course, I could be completely wrong on this idea, because I'm no professional, and markets are irrational at times. 😎
Happy Trading!
Disclaimer. My ideas are for informational purposes only. My ideas do not constitute solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments. You should not construe any such information or other comments as legal, tax, investment, financial, or other advice. There are risks associated with investing in securities. Investing in stocks, bonds, exchange traded funds, mutual funds, options and money market funds involve risk of loss. Loss of principal is possible. Please exercise your own due diligence.
I'm bullish on RKT and currently have a LONG position in the stock. I notice there is divergence between the Volume Weighted Moving Average ( VWMA ) and the Exponential Moving Average ( EMA ), both of which are configured to measure 14 days of price action in this daily chart . I interpret this divergence as bullish and a potential signal to an emerging upside trend for the following reasons:
1. VWMA measures (closing price + volume ), while EMA measures (closing price only). VWMA emphasizes volume , and volume is a key indicator of the (strength) of a trend. Currently, volume is decreasing, while price is making higher highs, hence the rising VMWA. In contrast, the EMA is only measuring the average closing price of RKT in the last 14 days (3 weeks), and indicates that RKT is trending down, which is obvious to the naked eye. I interpret the decreasing volume as weaknesses in the current down trend, and the rising VWMA as a signal of a potential reversal.
2. RKT formed a bullish cup & handle signal in the month of August and hit resistance on 2 Sep at 34.41 before retracing nearly 35% to the current price. Based on the 1:1 minimum price target ratio theory, I anticipate a long-term minimum target price of $42, based on the C&H pattern.
3. Volume is decreasing while price is moving sideways, which indicates a period of consolidation, before a new trend begins - either to the upside, or to the downside.
4. On 2 Sep, RKT beat earnings by 2304%, which I interpret as strong fundamentals for a company that just IPO'd o/a 06-Aug.
If price breaks and closes above the 14-day EMA with strong volume acting as confirmation, then I interpret this as a LONG signal with an initial target of $28. Of course, I could be completely wrong on this idea, because I'm no professional, and markets are irrational at times. 😎
Happy Trading!
Disclaimer. My ideas are for informational purposes only. My ideas do not constitute solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments. You should not construe any such information or other comments as legal, tax, investment, financial, or other advice. There are risks associated with investing in securities. Investing in stocks, bonds, exchange traded funds, mutual funds, options and money market funds involve risk of loss. Loss of principal is possible. Please exercise your own due diligence.
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