Using the 13-Day Moving Average as a Roadmap in RDW

 

What a nice rally RDW has put together over the past couple of days. Above is a daily chart of RDW along with its 13 simple moving average of the lows. This is a moving average I’ve been writing about for weeks now, and it continues to work well for me. I like its responsiveness and more importantly the way price consistently reacts around it.

If you look back on the chart, you can see how clearly this moving average has acted as both support and resistance in the past. When price has been below it, rallies have often stalled there. When price has been above it, pullbacks into the average have tended to attract buyers. That kind of behavior is exactly what I want to see from a tool I’m using as a decision-making reference.

A few days ago, RDW once again tested this 13-day moving average of the lows. At the time, the stock was under pressure, but instead of breaking down, it found support right where I would expect it to. Since that test, we’ve seen a sharp and decisive rally, confirming that buyers were waiting at that level. When a stock respects support like that, it usually isn’t random, and it’s something I want to stay aligned with.

Now let’s look at the chart on the right, which is also a daily chart of RDW but zoomed out a bit more. Notice where price stopped on Friday, right at the prior gap fill. That gap fill represented a logical area of overhead supply and a natural spot to take profits. That’s exactly what happened, and I took some off the table into that strength.

That said, I’m still holding a small long position because I’m positioning for a potentially larger move. I’m not in a rush to add here, though. Price is currently a bit extended above the moving average, and I’d rather be patient. My plan is to look for a pullback as the moving average catches up to price. Once it does, I’ll be watching closely for signs of support and a potential long entry.

As long as RDW continues to respect this moving average, it remains my roadmap for managing this trade.

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