I bought more shares of Wilmar as its price went to a new low yesterday. Some might question why I did this. Was I not afraid of losing even more money? Well, it was a calculated risk based on certain technical signs.
As Wilmar's share price went lower, I noticed that the CMF was forming higher lows. So, share price was forming a positive divergence with the CMF. What is CMF?
CMF stands for Chaikin Money Flow. This is a money flow oscillator that measures buying and selling pressure. When the CMF is in positive territory, the bulls have the upper hand. When it is in negative territory, the bears are stronger.
So, if we look at Wilmar's chart, selling pressure was reducing even as its share price drifted lower. We can see the selling pressure letting up with the CMF forming higher lows. It is a process.
When the CMF ......