Buying at Resistance levels?
Quote:
Originally Posted by
xxamr_corpxx
Resistance level at 530c or thereabouts. From a technical perspective, would it be a good time to increase the size of the position?
No, it wouldn't. Go back to the main technical reason for buying this stock - a breakout above previous resistance. There is no logic in buying just below resistance, at a level where there has been selling pressure in the past. You might get lucky, but why buy at a time when your chances of success are statistically lower? Fast oscillators such as the Williams'%R shown at the top of the chart show RAK as being "Overbought" and falling - the time to buy is when such oscillators are "OverSold" and rising.
The usual approach is to buy at support, not resistance.
You Sell when support is broken and buy when resistance is broken.
Your idea of building a position by means of a series of purchases is a good one, though. A common approach is to select an appropriate number of suitable indicators and buy a parcel as each indicator triggers. The idea being that the larger the stake you want, the more indicators you would use. If you only want to make a small (single) investment, you would be looking for the general concensus of the indicators you have chosen.
Here is an expanded chart of the breakout. You can see that there were plenty of signals spread over a couple of weeks. That was the time to be adding to your stake - not now when there are no buy signals and RAK might be approaching some resistance.
http://h1.ripway.com/Phaedrus/RAK1027.gif