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William O'Neil shared 7 rules to help investors avoid wrong basic patterns. Check out all 7 listed below ๐๐งต
1. Short-term bases of one to four weeks are risky and usually fail. Steer clear of them.
2. Wide or loose patterns are riskier. It's best to buy a tighter, more closed pattern.
3. Stocks that rise directly from the bottom of the pattern to new highs without any pullback or control points are risky and often experience sharp sell-offs.
4. A bottom break without a real increase in trading volume should be avoided.
5. The last stocks in the group to break new highs were weak and lagging behind. It should be abandoned.
6. The handle area is wide and loose, or the handle that is wedged along a low point is defective and often fails.
7. The fourth time a stock bottomed out (the โfourth stageโ bottom) is usually too obvious to everyone and is likely to fail.
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