Following the IBD 50? Here’s how you trade the newest addition — $FRHC – April 8, 2021
FRHC
Today let’s talk Freedom Holding ( NASDAQ: FRHC ), this is why; this stock was put on the IBD 50 today, which is pretty amazing for some goofy company, I’ll be honest, I never heard of it. Because of that, it got a lot of press, so I thought I would just take a stab at it technically..
If we start with the weekly chart, you can see the stock has run up a lot, I wish to heck somebody would have told me at $5.00, but what are you going to do? The way the stock has traded since December when it kind of peaked it has traded sideways, and so that’s our current situation on a weekly chart, it’s overextended.
Now we look at the daily chart and you can see, in this way, it doesn’t feel overextended, in the weekly chart it does. Look at where it is relative to the 200-day or 40-week moving average. Here it just looks like it has traded sideways for quite a while and has allowed the 200-day moving average to move up.
While the stock has been trading sideways, it kind of started right about here so it’s been trading sideways since here. The 200-day moving average has moved from 23.00 all the way up to 35.00 or 36.00 where it is now. So the stock is really extended in this way but not over the 50.
What I would suggest doing is this, it’s a pretty easy analysis. You have to look at this, about 12 percent as your potential downside. So if you are buying it now you are risking about 12 percent. What I would do is HOPE, it’s not a method but it is an emotion, HOPE that the stock falls back to test the 50-day moving average where at least you are buying it around the middle of the range.
Once it does that, once you can buy it around 53ish, THEN you set your stop down about 6 percent or so and you are going to wind up doing okay. If you get stopped out it’s okay, it’s an acceptable loss. If the stock continues to run then it’s an acceptable gain. The other thing is if the stock runs above $60.00. If it breaks out above this level then that is a confirmation of the uptrend of the breakout, of the consolidation and you are probably going to see the stock go a lot higher from there.
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