As with anything to do with investing or trading, there are as many definitions of various price patterns as there writers who comment on them. So take a look at the following chart and tell me what you see at “the right, hard-edge”. Is the candle for 6/21 a valid ‘Buy’ signal, or is it a '‘Bear Trap’? https://www.barchart.com/shared-chart/URA?chart_url=i_165732… Is there enough evidence in the chart to make an informed guess?
6/17 was the 1-month lookback low. The next trading day, 2/21, prices closed ‘up’, and they closed above the shorter term MA. That combo would qualify in Quill’s ‘Simon Says’ system as a confirmation. However, in my system --which I’m going to call ‘OddBall’, for reasons I’ll get into in a separate post-- there are two crucial pieces of evidence that suggest the signal should NOT be acted upon. #1, StochRSI hasn’t yet crossed about the 20 line. #2, ‘Volume’ is lighter than average.
So, which system called it correctly? Here’s next day’s chart, and now you know what a ‘Bear Trap’ is, or a 'Head Fake, as Quill likes to say. https://www.barchart.com/shared-chart/URA?chart_url=i_165732…