I am a beginner in trading. I currently paper trade using Oliver Velez’s 20MA and 200MA strategy.
So I bought Delta Corp shares after the first 3 minute candle of the day when I saw that it was an elephant bar, @148.3, and set the stoploss below the elephant bar @144.6, and set target @155.7 (Risk: Reward of 1:2). As per the strategy the 20MA was above the 200MA and both were in a narrow state.
So it made sense to buy, unless I’m wrong 😬. I know it’s not necessary that an elephant bar has to always follow through (which is why you put the stop loss), but I want to know what could be the reason for this happening.