Technical Approach that Outperforms the Stock Market
Many people aspire to use the "buy and hold" strategy, but often their "buy" phase begins when the stock market is in a strong uptrend, driven by euphoric news and widespread bullish sentiment. This typically coincides with the market reaching overheated conditions. Consequently, the "hold" part of their strategy tends to be postponed once the market starts to decline.
Technical analysis help investors to time the market, yes, it is possible when you are disciplined and can manage your emotions, the following chart for the $Spenda Ltd(SPX.AU)$ highlights clear reversal signals using the monthly chart.
The red arrows on the chart points out indecision candles that have consistently preceded significant stock market corrections. The first instance marked led to the 2018 bear market, followed by the COVID crash, then the 2022 bear market, and most recently, the 2025 tariff war. While the chart contains other indecisive candles, those specifically highlighted were followed by declines that pushed the price below the 5-month moving average, as indicated by thin arrows. Simultaneously, as shown by black arrows in the sub-chart, the Stochastic oscillator crossed below the 80 level, confirming overbought conditions had dissipated.
Regarding the Relative Strength Index (RSI), its overbought threshold is 70. A key warning sign, known as divergence, occurs when the RSI sets lower highs while the price itself continues to set higher highs – a condition that typically foreshadows pullbacks.
Similarly, bullish reversals are highlighted by green arrows, representing bounces from the 50-month moving average and bullish candles that either bounced from that level or formed a bullish setup, as seen in September 2024. The sub-chart also features an arrow indicating the Stochastic oscillator crossing above 20, which validated the bullish reversal following the 2022 bear market.
While looking at the chart in hindsight makes it appear logical, living through its real-time movements – listening to news or social media, watching futures during extended hours, and constantly checking the chart throughout the trading day – makes emotional management significantly more challenging.
For whom haven't open CBA can know more from below:
🏦 Open a CBA today and enjoy privileges of up to SGD 20,000 in trading limit with 0 commission. Trade SG, HK, US stocks as well as ETFs unlimitedly!
Find out more here：
Trade on a Cash Boost Account and enjoy up to 6 months of Commission-Free trading.
💰Join the TB Contra Telegram Group to Get $10 Trading Vouchers Now🎉
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
