July 17, 2023

1. Profit taking zones 2. Entry Points 3. Potential Gain and loss

Quick-buck stock???


Many are mesmerised by the potential returns that penny-stocks have to offer, but  tend to over-look the risk involved in owning these notorious assets. A penny-stock can move from zero to hundred in a short space of hours. The opposite is true too. Risk/Reward. 

Before we look into the potential returns, let us examine the potential loss (realised or unrealised).  I intentionally included a screenshot of my closed position on the stock because I know how a Human mind works, we are too quick to fall into the fallacy of what we can potentially gain and forget what we can potentially lose.  

The stock is currently presenting a head and shoulder (marked in red arrows) as shown in the picture. It is currently trading at a neckline (Area marked in red) and this is the area of interest. A break below this level will drive price to R0.10/share (~50% drawback) and this would be a completed head and shoulder. The R0.10 zone was my previous entry point and it is still the zone I am still looking to buy at again. The stock is more likely than not to go back to this zone. My target on the stock (if it goes back to R0.10) will be R0.44/share and this was my previous exit point because of the resistance area at this price.

Although the stock is showing some potential downside, it is always wise to look at both sides of the coin. Given that the stock does not break below the neckline, it will likely go back to test the resistance at R0.44/share but will hardly trade sustainably above the price. I will not be taking any position in this case.



this is not financial advice


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