Sorry for pitching in .
Ideally bottom-fishing should be done on fundamentals basis - ie when valuations are low and we have a fair idea that there are some expected tailwinds for the company/sector in near future.
On technical basis ,here are our two cents for a normal investor ::
A) One can look at the weekly and mosnthly charts , RSI divergence can give some help for bottom-fishing
B) Monthly/weekly MACD cycles turning into buy can be used as additional confirmation .
C) Oversold zones in weekly/monthly charts
But in case of above, one need to be cautious as the stock can keep falling for some time despite having the (A) and (C).
These techniques should only be used for taking initial postions - one can keep adding after further price-action. This way one can partially participate in the upside from lower prices .
Somehow we don’t agree that taking a position after pattern-confirmation can take away half the gains.Here are two example son how even a late -entry can give enough gains .
As per stage-investing method , one could have taken half postion at 57 ( 1st yellow line ) and rest after closing above 2nd yellow line ie near 63.
Stock went up to 270 and that is 4-5 X returns.
In this example if someone would have entered at 60 as per Stage Analysis method, he could have made 8-10 times returns. Though entry at bottom could have given more returns but no one can be sure where the bottom is .
That confidence can come only from understanding of fundamentals and market situation.
Following a pattern also helps in entring at the right time when there is going to be momentum in the stock.
Otherwise even if one catches the the bottom , but if there is no future momentum in that stock for coming months or years , an investor would lose the time -value .
For example, power/realty sector stocks did not do anything for 10-12 years, and even if someone has cautght them at the bottom and was sitting on the same for more than a decade, he would have paid the severe price of opportunity-cost .