The following Toyota daily chart (very busy - I'm sorry) illustrates how I choose my entry point when buying a stock.
Essentially, I want to buy a stock when it is breaking out of a properly formed basing pattern, in other words, a period of consolidation. I look for better than average volume on the breakout. This tells me that the institutions are bidding up the stock. I want to own a stock that has caught the fancy of the big boys. They are the only ones that have the true power to move a stock higher.
I have drawn boxes around consolidation periods. Notice the stairstep quality of the moves. My buy point (also called a pivot point) is clearly defined. I buy when the share price enters the Buy Zone, the blue shaded area. If the breakout fails, I sell it when the price enters the Sell Zone, the pink shaded area.
(click on chart for easier viewing)
Toyota Motor Company
Buy Trigger Analysis
This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure