$ABNB TOP 20 - Lesson note -

We are seeing a nice pull back now, in a bull channel, and the pull back looks to be aiming for the bottom of the channel which coincides with the 0.618/0.65 Fib levels, this will have it into the bear case and buy zone. If this can hold this level, I would be looking at a position here.

I have been asked the same question a number of times this week and it is, what does it mean for a share price to hold a level?

So this is a good question, when I mention this, I am talking about either holding: an important Fib level, an important moving average level (200 Day MA or 50 Day MA) or the blue support lines or a yellow trend line support.

It is not based on how long, it is based on not going below this level, buyers are stepping in to stop this from going any lower, it may lose the level but regained very quickly, it can then move sideways or can start moving higher, if it comes back down again and holds the level again, it means it has support here, this is called a retest and it is very important. 

The best way to confirm a support, is when a level is retested and holds for a second time.

When a stock holds an important level, like the 0.618 Fib level on this chart above, it means it has found support and it is where we expected Wave 2 to hold, so this is a good price to start a position.

In short, if a price can hold a level, gain support, where we expect it to hold, then this is a buy signal for us. If the price does not hold this level, it does not have support, we then either wait for it to find another support level or try to recapture the support level it lost.

So What Now?

RSI is showing that this is still in a downtrend, so we expect this to move down more to our Wave 2 spot and the 0.618 Fib, we want this to hold this support level. If it can not hold this level, we can expect this to move down to the bottom blue line in the buy zone.