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When you say “watch if it can hold (support)” how long are you wanting to see it stay above the level?

As a general rule of thumb you want price to hold important reference levels on a closing basis. This means that you can allow for an intraday move below the mark. This is commonly referred to as a shakeout. However you must be aware that some shakeouts can be severe, especially in the high octane swing stocks. Due to this it totally depends on the individual situation if a trader should scale-out some quickly on the first intraday violation of support or wait until end of day with the risk to fall victim to a nasty shakeout. If a stock closes below the expected “support” w/o a shakeout it tells you that:

A) The stock changed character and could be in for a deeper pullback/consolidation or maybe it is gone for good

B) You failed at identifying a proper support level

C) The stock has only strong hands on board which are not prone to overreacting.

If the latter is the case you can scale-out and then simply scale-in again once price moves up through the mark tomorrow and or the days ahead. Large cap stocks which are widely followed move more like a ocean tanker so support and changing direction can be a multiday process which often sees closes below support.

The quintessence is this: You want your stock to show you that it adheres to proper support in one way or the other. If a stock stops doing what you want it to do you have to think about letting it go.

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