For the purpose of calculating my risk/reward ratio, I would like to know how do I determine where the resistance point is on a stock that is at it all-time high price? Thanks, T.C.
Use fibonnaci retracements forward like 127% or the 161% Another alternative would be to using the pivot points which will state the resistance.
There is no resistance. No overhead supply. No one waiting to breakeven. Everyone long has a profit. One high however, is a special one. The last one. The maximum risk point. Only clear in hindsight. Ride your winner. Make hay while the sun shines. 80% of your profits typically stem from 20% of your trades. Relative strength/momentum will weaken before the underlying price. However, try to discern the specialist/market maker agenda. His latitude to gap (out of the blue).. When the specialist is sold out, he's done unless he can amass more inventory. That calls for a "correction". He will do that intra-day IF he can. However, prior to that he MAY have went NET short selling into strength IF volume was exceptionally heavy. Calls for a greater correction in the form of his covering. Calculated pivot points, ie( (H + L + C)/3) x 2) +L seldom work. IF you must use pivots try ( H + L + O +O) thus giving double weight to the OPEN and disregarding the close (which is a "bookkeeping entry"). The open provides CLUES. It's curent, versus stale prior period price points. And.......the open is how "he" moves away from his basis.