Buy Weakness

Buy Weakness is a proactive trading strategy whereupon the technical trader beings to take a long position in a stock as the price is dropping. This is the opposite of selling into strength.

Buy Weakness

Buy Weakness is a proactive trading strategy whereupon the technical trader beings to take a long position in a stock as the price is dropping. This is the opposite of selling into strength.


Buy Weakness Interpretation

Buying weakness is used when the price of the stock is still falling but is soon expected to reverse. Various indicators may be used to determine when to use this strategy.

Momentum oscillators such as Relative Strength Index (RSI)  and Stochastic Oscillator can be used to determine when the stock is oversold. Alternatively the technical trader can look for divergence between the stock price and the On-Balance Volume (OBV) indicator.

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