HUD BAY MINERALS (TSX:HBM) – a trap for the unaware !

hud bayThe embedded chart shows daily price action of Hud Bay Minerals (TSX:HBM). Note how a classic 2-2-2 pattern recently completed itself, giving a sell signal at D ( the $10.50 intra-day level).

I have posted this example today as sort of a case study to show how a trader just following the 20 day moving average would have been ensnared in a trap.

Someone unaware of the 2-2-2 pattern methodology, would likely have noted the bottom on Feb 21 and a higher bottom on March 4. He or she then would have likely bought the stock as it neared the 20 day moving average in hopes that momentum would propel the stock higher.

But…SURPRISE !!….the run at the 20 day moving average was a trap. It was simply the completion of a point D on the 2-2-2 pattern and a signal to either go short or step aside from a previous long position.

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