4 Simple Steps to Avoid Downtrends 📉 (a thread)
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1. Know the difference between an uptrend & a downtrend 📈📉
At TraderLion, we identify an uptrend as stocks/markets that trade ABOVE a RISING 21DSMA and 50DSMA.
A downtrend occurs when stocks/markets trade BELOW a downsloping 21DSMA/50DSMA.
Let's look at an example 👇
$QQQ from 2020 shows what an uptrend, downtrend, and even chop period looks like.
2. Know when it is really time to make money on the long side.
Swing Traders: when markets/stocks are above the rising 21D
Position Traders: when market/stocks are above the rising 50D
We can take this one step further by understanding what a Power Trend is 💪
The trend is really your friend when we have a Power Trend in the general indexes. A concept coined by the @IBDinvestors team, we must have the following:
✅ Low > 21ema for past 10 sessions
✅ 21EMA > 50SMA for at least 5 sessions
✅ 50SMA slope is positive
✅ Market closes up