Evaluating the URC Trading Strategy: A Test of the 8-Step Approach
Introduction
In relation to Step 4: Entry and Step 6: Color Change of our 8-Step Trading Method, the 1/3s Approach offers a systematic way to manage positions after making an initial entry. Once we’ve entered at the optimal buy spot, as detailed in Step 4, our focus shifts to scaling into the trade within the 1/3 zone, where we anticipate strong trend continuation. We avoid adding in the 2/3 zone, where the market might encounter resistance or approach its peak. As the price reaches the 3/3 zone, we implement Step 7: Profit Take, gradually locking in gains and reducing exposure. This structured method allows us to capture the bulk of the trend while minimizing risk near potential reversal points.
As we near the end of Week 2 in our ongoing URC trading activity, it's time to assess how well our scenario modeling has performed and what we can expect on the final trading day, January 10, 2025. Below is a detailed breakdown of key observations and an updated outlook based on the past four trading days.
Overlay of actual URC price action for January 6–9, 2025, with the Week 2 scenario, highlighting how price movements respected the demand zone and resistance levels.
Summary of Week 2 Trading Activity (January 6–9, 2025)
Day 1: January 6, 2025
Opening Price: Php79.80
High: Php82.70
Low: Php79.00
Closing Price: Php82.40 (+3.26% from open)
The price made a strong upward move, testing a high of Php82.70, temporarily breaching our projected resistance at Php80.70, before closing near the top of the range. This signaled early bullish momentum, though the breakout was not sustained.
Day 2: January 7, 2025
Opening Price: Php83.00
High: Php83.95
Low: Php79.80
Closing Price: Php80.00 (-2.91% from open)
After opening higher and making a new weekly high at Php83.95, the price reversed sharply, closing below the resistance level at Php80.00. This reversal indicated that sellers were active near the highs, resulting in a bearish close.
Day 3: January 8, 2025
Opening Price: Php80.00
High: Php80.70
Low: Php77.35
Closing Price: Php77.65 (-2.94% from open)
The price attempted to break above Php80.70 but faced rejection. This led to a sharp sell-off, with the price testing the demand zone near Php77.07 before closing near the day's low. The day’s price action reflected strong selling pressure.
Day 4: January 9, 2025
Opening Price: Php77.70
High: Php79.15
Low: Php76.40
Closing Price: Php79.15 (+1.93% from open)
The price opened near the demand zone and tested a low of Php76.40, which remained above our stop-loss level of Php75.85. A recovery followed, with the price closing higher at Php79.15, confirming that buyers stepped in near support.
Assessment of Week 2 Scenario Modeling Skills
Demand Zone Accuracy:
Our scenario correctly identified the demand zone around Php77.07, which was tested on multiple days. The price consistently found support above this level, confirming it as a key area where buyers are active.Accuracy Rating: High
Resistance Level Testing:
The projected resistance level at Php80.70 was tested multiple times but not breached on a sustained basis. While a breakout was anticipated, it has not yet occurred, highlighting the importance of this level.Accuracy Rating: Moderate to High
Stop-Loss Placement:
The stop-loss at Php75.85 was well-placed, allowing room for market fluctuations while protecting against major downside risk. The price remained above this level throughout the week, keeping the position intact.Accuracy Rating: High
Breakout Timing:
Our expectation of a breakout above Php80.70 early in the week was premature. While the resistance level was correctly identified, the timing of the breakout did not align with our forecast.Accuracy Rating: Moderate
Expectations for Day 5 (January 10, 2025)
Key Levels to Watch:
Support: The demand zone around Php77.07 remains crucial. Continued buying interest near this level could provide a foundation for an upward move.
Resistance: The resistance at Php80.70 is still a significant barrier. A close above this level with strong volume would indicate a breakout and renewed bullish momentum.
Scenarios to Anticipate:
Bullish Scenario: If buying pressure continues and the price breaks above Php80.70, we may see a rally toward the next resistance at Php85.00. This would align with our initial scenario.
Neutral Scenario: The price could consolidate between Php77.00 and Php80.70, reflecting ongoing indecision in the market.
Bearish Scenario: If the price breaks below the demand zone and breaches the stop-loss at Php75.85, it would invalidate the bullish outlook and signal an exit from the position.
Action Plan:
Hold the current position as long as the price remains above the stop-loss level.
Monitor for a breakout above Php80.70. If confirmed, consider adding to the position in line with the original 1/3 Zone Action strategy.
Exit the position if the price breaches the stop-loss at Php75.85.
Conclusion
With four trading days completed, our Week 2 scenario modeling has proven effective in identifying key technical levels, particularly the demand zone and stop-loss level. While the anticipated breakout has not yet occurred, the price behavior has closely followed our expectations in terms of consolidation and respect for key levels. As we head into the final trading day of Week 2, disciplined monitoring of support and resistance will be crucial.
We will continue to hold the position, awaiting a potential breakout or further confirmation of market direction. Stay tuned for our next update as we conclude Week 2 of trading!
Thank you for following our trading journey. As always, we at Micro Stock Trader are committed to sharing our insights and documenting our progress as we refine our strategies.
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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