Above is a 60-minute chart of RDW, and as you can clearly see, this stock remains in a strong uptrend. The higher highs and higher lows are well defined, and there’s no question that buyers are in control of the bigger picture. Even so, I have no interest in chasing strength. Chasing extended moves tends to increase risk and often leads to poor entries. Instead, I prefer to wait patiently for a pullback that offers a more favorable risk-reward setup.
Pullbacks within strong trends are where I like to focus my attention. They allow price to reset, shake out weak hands, and create opportunities to enter closer to support. In RDW’s case, the area I am watching closely is the 8.70 to 9.00 zone. This level previously acted as resistance, and in trending markets, former resistance often turns into support. That alone makes it an area worth paying attention to.
What strengthens this level even more is the rising channel I’ve drawn on the chart. The lower boundary of that channel lines up almost perfectly with the 8.70 to 9.00 area, creating a clear confluence zone. When multiple forms of support overlap, I tend to take those levels more seriously.
There’s also a measured aspect to this setup that I find compelling. The previous two pullbacks in this uptrend declined approximately $1.88 and $2.09. If the current pullback retraces about $2, it would bring price right into the zone I’m watching. That symmetry gives me a realistic expectation for how deep a normal pullback might be without damaging the overall trend.
Whether RDW pulls back into that area remains to be seen. But if it does, I’ll be ready.
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