You remember in a previous post ( you can see it in the related posts section at the bottom of this post) I was talking about how I believed SRSR would likely get an ‘automatic rally’ ?
Over the course of the last 4 trading days that is exactly what happened.
In my previous post I was trying to figure out whether or not .081 was to be the final low or not. I guessed that it would be. As it turns out .081 was not the final low. SRSR went into the low .06’s which was a more solid area of support before the automatic rally.
The automatic rally shot up over 100% from the lows and displayed in true fashion how amazing this type of setup can be. The hard part is figuring out where the final low is. But even if you had entered at .081, there was still a sizable profit to be had, but it would have required a draw down all the way to .062 before resuming higher.
So it is somewhat dangerous to play these automatic rallies but they are powerful in the aspect that there is tremendous volatility. The best automatic rallies I have seen are the ones that occur after a massive price collapse from a very strong and long uptrending arcing blow off type uptrend that peaks into a climax.
This is not a setup you see every day, but when they do occur they are definitely worth studying. After the automatic rally occurs one can expect a long drawn out trading range that gets more and more quiet as time moves on. I hope I can find another one of these some day. I wish they would occur more frequently because they do seem like a very high reward type setup with high probability of success.