Hi Traders
Price fell from point 1 due to increased selling activity from the professionals, at point 2,
we witnessed that the selling had decreased and price started to move higher, this activity
of supporting the price from falling deeper was clearly identified by my propietary indicators,
"Markup (Bullish)" and followed by another "Test Base" to confirm that the selling had been
absorbed by the professionals, when there was no supply in the market, price would slowly
find its way up and any demand can easily moved price higher. With "Go Long1,
Blue
Diamond" indicator appearing after a few sessions later (mid october), it was clear that the
trend was indeed heading for higher ground.
So how would I know when to take profits?
Let's discuss further, after the "Go Long1" was triggered, price began to fall due to profits
taking as price had touched the long term support line(
Orange Line). This pullback was well
supported well by the 13 days Moving Average (
Black) and price rebounced and broke
the orange support line (
A) , which was the resistance line.
Price continued to head higher toward point 3 but with weakness. This was indicated
by the "End of Up Market" and "Lack of Demand" denoting that the trend may had peaked.
This was the time where one should decide to take profits and stay sideline.
Further weaknesses was confirmed by the "Supply Coming In" the next day that brought
the price back to the support level (
B). Continuous weakness caused the price to break the
support level $6.18 in mid November.
With the last defense (
C) support line set at $5.90, I was eager to see if this final support would
fail to hold the price again as I am planning for a Long Trade for possible sign of trend reversal.
My stock scanner picked in "Demand Coming In" indicator for the end of day session, 17th Dec.
Since this is the first sign of positive indicator, I decided to probe more into the price & volume
action. Just by drawing channel lines and moving averages, I would be able to estimate the
probable support or resistance level in the near term.
As can see from point 4, "Demand Coming In" indicator is triggered with nice price range and
average volume. A few sessions back, "Reduced Selling Pressure & Test Base' indicators
appeared numerous times as the price moved towards point 4.
On close observation, we can see that the 17th December Day's Low (point 4) coincided with
similar low point held strongly in last September (point 2), so is the stock ready to stage an
upmove from now.
Is this the correct timing to go long now?
Frankly speaking, it is still too early to tell. One single day of positive activity may not mean that
the price is going to move up from here. So what clues am I looking for next?
As you can see that the price bar is colored Red and the trend ribbon below the volume bar is
also colored Red. If the trend is ready to move higher, I would want both the price bar and trend
ribbon to turn Green, giving me a firm confirmation that the trend has indeed turns positive.
If a surprise "Go Long1,
Blue Diamond" does appear from now onwards, I can firmly convince
that the trend has turned up and provide good rewards to risks returns.
As you can see, I do not use any standard charting package tools such as MACD,RSI,Stochastics Oscillators, RMI, ADX and more...Reason: Everyone is using the same standard indicators with standard
settings. An astute trader or your trainer can easily tweet the indicator to give much earlier entry or exit
therefore where is your competitive advantage in this ruthless game of money.
Learn how to read the price and volume activity (bar by bar analysis) as both are the real-time indicators of all. Others are just derivatives and may give contridicting triggers at times when combine together.
If it is so easy to use standard indicators to trade for a living, we would see many successful traders among us, many would have Fired their Bosses and stay at home.
Trading financial instruments are not so simple as you think.Spend more time to educate yourself instead
and don't rush to trade as the Markets will be there even after we're gone.
Until then, cheers..
Happy Profitable Trading Ahead!