SALUTE 15 Apr 2020: Rule-based Trading System 50% Profit!

I would like to share a simple rule-based trading system that I implemented recently to trade SALUTE.
This system is intended to capture the first pullback after a stock has recovered from an extended decline. It uses three common technical indicators, namely 20ema, MACD with the standard 12,26,9 settings, and, slow stochastic with the 5,3,3 settings.

SALUTE Daily Chart

The system work as follow:

1. Look for a stock that has been on a long spell of decline and trading far below its declining 20ema line.

2. Wait for MACD to cross above its signal line from below the zero line. This is an indication that the decline is likely to end.

3. Wait for price to cross above the 20ema line, which should now be flat or rising. This is an indication that buyers are starting to take control.

4. Wait for price to make a correction and stochastic to decline below its 25% line, which is an indication that the price correction is likely to end. Mark the candle corresponding to the stochastic below 25% reading.

5. Buy the next day when price trades above the high of the "marked" candle. The day should end with an above average volume to indicate that buyers have taken control.

6. Set your 1st take profit at the high above the 20ema before price made the correction and the 2nd take profit at the next opposing SR zone.

Now let's look at SALUTE daily chart.

1. SALUTE has been in a long spell of decline and trading far below its 20ema line.

2. MACD crossed above its signal line on 27/03.

3. SALUTE crossed above its 20ema line on 07/04.

4. SALUTE corrected for 4 days until the stochastic declined below its 25% line on 14/04.

5. Bought SALUTE at 0.415 on 15/04 after the previous day candle high was taken out. See screenshot below.

6. Sold half at 0.47 (which is the high above the 20ema before the correction) on 17/04. See screenshot below.

Sold approx. half of remaining lots at 0.61 on 30/04 within the next SR zone at 0.61-0.645. See     screenshot below.

I still have some SALUTE shares left. Friday candle was a shooting star with heavy volume, which indicated sellers have started to take control. Depending on next week price action, I will either sell to close all my position or hold longer for a ride to the next SR zone target.

Disclaimer:

Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and any information presented in this blog.