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There is nothing that cannot happen in the market in our favor or against us. Atlas Development shares (LSE:ADSS) are weak: they have been caught in a long-term, slow and steady downtrend. The market journeyed south from the beginning of this year, and things became really volatile on the months of March to June, forming a continuous chain of hammers in the chart.
In spite of the volatility, the price continued to move downwards, eventually breaking out below the lower Trendline in June 2015. This shows that the ‘sell’ signal has been renewed, for the RSI period 14 itself has gone far below the level 30. This is a formidable bearish signal indeed! The market might eventually reach the accumulation territories at 2.000 and 1.500.
Do not think that the market would simply rally because it is gone too far to the south. Majority think that an overextended market has gone too far in one direction. Nevertheless, the market would continue in the same direction after a short-term consolidation. Strong movements allow further strong movements, as long as the fundamentals behind a movement is valid, meaningful reversals would be few and far between. It takes time for the price to evolve.
Sellers may profit from this price action by renewing their short positions. Sometimes, the best way to protect yourself is to be aggressive.
This forecast is ended by the quote below:
“Let us say this first: No trading habit, no advice, and no trading rule is universally valid at all times. More often than not, it all depends on the proper context in which any statement is made, and even in an ideal environment there will always be exceptions and counter-examples.” – Marko Graenitz
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