Contents:
- Retracement Perspective: Understanding the Power Move
- Retracement Levels and Probabilities
- Confirmation Signals to Watch
- Trading Recommendation: Wait for Confirmation
- Conclusion
As of January 21, 2025, RL Commercial REIT Inc. (RCR) closed at ₱5.94, which represents the 41% retracement level of a prior downward power move (from ₱6.29 to ₱5.70). Using the Percentage Retracement Trading Strategy, we aim to determine whether this is the right time to buy, sell, or hold.
RL Commercial REIT Inc. at 41% retracement after a downward move, January 21, 2025.
Retracement Perspective: Understanding the Power Move
- Power Move: The downward movement that originated at ₱6.29 (100% retracement) and ended at ₱5.70 (0% retracement). This marks the start and end of the price decline.
- Current Position: The price at ₱5.94 has retraced 41% upward from the low of ₱5.70.
- Focus: As a trader focused on buying in upward setups (not shorting), the goal is to find confirmation that the price will reverse upward beyond the 55%-75% retracement zone, with a potential move back to ₱6.29 (100% retracement).
Retracement Levels and Probabilities
Zone 1 (0%-33%) – Shallow Bounce with Weak Recovery Potential (₱5.70-₱5.89)
- Current Price: ₱5.94 (41% retracement level).
- Probability of Upward Continuation: Moderate. The price has rebounded from ₱5.70 but remains below the critical reversal zone (55%-75%). A shallow bounce often lacks the strength needed for a sustained move higher.
- Trading Action: Wait for further confirmation of momentum and strength before adding positions. Entering too early may expose traders to a possible pullback.
Zone 2 (33%-66%) – Deeper Bounce with Improving Reversal Potential (₱5.89-₱6.09)
- This range partly overlaps with the Sweet Spot (55%-75%), which is the optimal reversal zone.
- Probability of Reversal: 60%-90%. If the price enters this zone and shows strong volume and bullish candlestick confirmation, it increases the likelihood of a move back toward ₱6.29 (100% retracement level).
- Trading Action: Consider buying in this zone, especially as the price moves closer to the 55%-75% range. A strong breakout past ₱6.05-₱6.15 strengthens the case for an upward continuation.
Zone 3 (66%-100%) – Strong Bounce Approaching Full Reversal (₱6.09 and Beyond)
- A breakout beyond ₱6.09 would indicate strong bullish momentum, increasing the probability of a full retracement to ₱6.29.
- Trading Action: If the price breaks above ₱6.09 with strength, it reinforces a buy-and-hold strategy until the full retracement is achieved. Traders who entered earlier may add to their positions or hold until the price retests previous highs.
Confirmation Signals to Watch
Before committing to a trade, look for clear bullish confirmation in the ₱6.05-₱6.15 Sweet Spot (55%-75% retracement range):
- Volume Surge: A noticeable increase in volume near ₱6.05-₱6.15 signals strong buyer interest.
- Bullish Candlestick Patterns: Look for hammers, bullish engulfing, or piercing patterns, indicating a shift in momentum.
- Breakout Above ₱6.09: A strong move and close beyond this level confirms upward momentum and increases the probability of a rally toward ₱6.29 (100% retracement level).
If these signals align, it supports a buy-and-hold strategy for potential upside continuation.
Trading Recommendation: Wait for Confirmation
Based on the current price at ₱5.94 (41% retracement), the stock is approaching the critical reversal zone (55%-75%) but has not yet provided sufficient confirmation for a buy decision. Here’s a breakdown of actions:
- Buy: Only if the price moves into the 55%-75% retracement zone (₱6.05-₱6.15) with strong bullish confirmation signals.
- Hold: If you already own RCR, hold your position while monitoring for signs of a reversal in the 55%-75% range.
- Sell: No immediate action to sell, as the stock is in a potential recovery phase.
Conclusion
At ₱5.94, RL Commercial REIT Inc. is at a pivotal retracement point. For traders focused on upward momentum, patience and confirmation are key before entering a position. Monitor price action closely as it approaches the 55%-75% retracement zone, where the probability of a reversal back to ₱6.29 significantly increases. Until then, a hold strategy is advised.
Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.
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- Micro Stock Trader: Comparing the Modified 10-Step Trading Strategy vs. Retracement Trading Strategy
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