Bullish Signals or Traders’ Trap at Greek General Index Chart?

Greek stock market has lost 50% of its value in the last 6 months but bullish signals can be spotted on the General Index chart during October. Higher lows and new weekly highs along with increased volume may boost stock prices in the following weeks. Have Greek stocks really hit rock bottom so that a downtrend reversal is expected, or is it a short term correction that will be forgotten in December if the index goes below 700 points? Investing in Greek stock market is not that popular lately but the 50% haircut has driven bank stocks’ prices 10% up on Friday. It would take a lot more though for financial stability in Greek economy and investors should be extra careful not to get trapped if the strong downtrend resumes.

Athens Stock Exchange General Index (ASE:IND) has hit a 10-year low close to 700 points in October as a result of many investors and traders alike dumping a lot of shares this year and losing their trust in Greek stock market. October though was a relatively good month for the market, despite the pressure from the world financial markets and European leaders. General index broke above the 800 points mark, leading to buying power taking control of the stock market. At least in the end of last week, because there is still doubt whether Greece can eventually avoid bankruptcy.

The General Index chart shows a prominent downtrend. The market is trending below the downward trend line and a lot of courage is needed to invest under such conditions. Yet, the new higher lows at the end of the Index line on the chart provide the necessary optimism, in order to risk money in trustworthy stocks. On the other hand, a less risky trader can choose to wait a couple of days until they enter the market, should the market decide to retest the short term upward trend line. In that case, a tighter stop loss guarantees a higher reward-risk ratio while trading at the low is never a bad strategy. Buying low is only half of a profitable trade, the question is whether we are going to sell high as well!