UK Stocks and ETFs - Watchlist and Discussion

[isatrader]

A question: In stage analysis, re. support, what is the general rule of thumb? Are horizontal support lines the first lines of support with the 10 week MA being the next, followed by the 30 week MA, with the 40 week being the last chance saloon for support in stage 2, possible stage 3?

There are no specific rules from the book on this other than horizontal trend lines with multiple touch points are more significant than angled trend lines etc. As for the various moving averages, their support and resistance strength is debatable as some people say they have no significance and others say they they do have significance because of the numerous traders that watch them and like to buy around them.

So if you go with the theory that some traders like to buy around the major moving averages, then they will offer some form of support. But imo, it's definitely secondary to any previous price action support like previous swing highs and lows, especially ones that were tested multiple times before they broke.

The order with which you've put them is logical, and yes, generally if a stock is below a rising or flattening 30 week MA and then testing the rising 200 day MA, it very likely to be in Stage 3.