Australian Sharemarket Trader Report March 10th
BT Investment Management Limited (BTT)
BT Investment has formed an ascending triangle with a horizontal resistance level at $6.60. Traders can watch this price level and wait for a trigger signal in the form of a bullish candle close above this resistance.
Medusa Mining (MML)
Medusa Mining had a bullish breakout from the $2.30 horizontal resistance last Monday after forming a pattern called a cup and handle. This formation is named as such for obvious reasons as the pattern forms a rounded cup and a smaller rounded bottom which forms the handle. The pattern is a bottom reversal formation .
After the resistance breakout there has been a re-test of the resistance/support level of $2.30. At this stage I would probably sit on the sidelines based on the bearish candle on Friday and wait for a more bullish candle stick off the support level before considering an entry.
Any close below $2.30 is likely to invalidate this setup and see the share price retrace lower.
Orica is moving sideways and forming a symmetrical triangle. Traders can watch for a breakout above the upper trendline of the triangle to trigger a buy signal. The white vertical line shows the possible target if the breakout occurs based on the height of the triangle being projected upwards from the breakout.
Happy Trading for the week ahead
Australian Sharemarket Trader Report March 5th
All Ordinaries Index
The Australian share market rose today in line with the US markets overnight on easing fears of a conflict between Russia and Ukraine. The market was given another boost during the day on the data announcement from the Australian Bureau of Statistics which showed the gross domestic product rose 0.8 per cent in the December quarter. The All Ords index closed at it’s highest level in more than five and a half years rising 0.8% for the day to close out the session at 5457 points.
The chart below shows the bullish candle close above the resistance level of 5450. There was a nice bullish hammer two days ago which rejected further price declines and the technical resistance level of 5370 held up as support. This was a signal that further price rises were likely to occur in the subsequent days.
From here prices should continue to climb with buyers entering the market and short sellers closing positions based on the resistance level being cleared and being stopped out.
Stocks on the Watchlist
Central Petroluem (CTP)
Central Petroleum had a strong bullish breakout from a trading range on February 19th on heavy volume. It has since consolidated to form a pennant triangle. I have highlighted the declining volume after the breakout which indicates an ordered selloff. I expect a bullish breakout any day now and this is likely to occur on higher volume. I will have this on my watch list for such a breakout, volatility is likely to be high so this is not one for the faint hearted.
G8 Education (GEM)
G8 Education has had a stellar run up since it’s gap break out from long term resistance of $3.40/45 on February 10th. This upward trend was momentarily slowed with the subsequent formation of a bullish flag. Today’s breakout provides a trigger signal to go long tomorrow provided the opening price can remain above the low’s of today’s candlestick.
IProperty Group (IPP)
Iproperty Group is in a healthy uptrend and today the price was able to breakout from a bullish pennant. This is a signal that further price rises are likely with continuation of the up trend. I will look to trade this long tomorrow. I will discuss this stock setup in greater detail on the website under the following link http://letstradeshares.com/asx-charts/ .
If you have any specific questions on the above setups or other stocks feel free to contact me through the website.
Forex Trader Report March 2nd
The great thing about technical analysis is that once you have a solid foundation of knowledge you can apply that knowledge to trading any financial product if it meets your trading plan and money management criteria. I mainly trade Australian and US listed Contracts for Difference (CFD’s) but this does not stop me from looking at trading opportunities in other financial products such as Foreign Exchange (Forex).
Today’s blog article will focus on the technical anaylsis of currencies trading against the United States Dollar (USD).
Australian Dollar vs US Dollar (AUD/USD)
The Australian Dollar has consolidated in recent months and as the chart shows the resistance at $0.9090 halted further price increases and it is now retracing back towards the support level of $0.8850.
For any bullish momentum to continue the price needs to breakthrough $0.9090. If this occurs an inverse head and shoulders will be formed which is a bullish reversal pattern. At present I will sit on the sidelines waiting further price activity to determine the direction of the currency pair.
New Zealand Dollar vs US Dollar (NZD/USD)
On Friday the NZD/USD formed a bearish pinbar at the resistance level of $0.8430 . If you look back at the previous times the NZD/USD hit this price level and then turned down it was also after a bearish pinbar. This gives confidence that the current pinbar is likely to do the same again. I will look to go short on Monday with a stop loss placed just above the pinbar high and resistance level.
Euro Dollar vs United States Dollar (EUR/USD)
The Euro surged on Friday and is challenging the resistance level of 1.3830/50. It would not surprise me if the price either pauses here or retraces a little before breaking through resistance. At present I will be sitting on the sidelines with this currency pair.
Brittish Pound vs United States Dollar (GBP/USD)
The GBP broke out from a bullish flag on Friday. I will look to place a long order to buy the GBP/USD on Monday with the support level at 1.6600 allowing for a clear stop loss level.
Happy Trading for the week ahead
Wall Street Trader Report February 26th
Jabil Circuit Inc (JBL)
Jabil Circuit has an interesting chart setup with the formation of an early up trend with a series of higher highs and lows. The stock price was able to breakout from its downtrend a few weeks ago and is nearing it’s next resistance at $18.90. Prices tried to breakout above this level yesterday with a close at the resistance price.
Traders can watch this setup for a bullish candle close above $19.00 to trigger a buy signal.
This chart shows a very good example of support and resistance in action as illustrated by the S/R horizontal lines. During the down trend the pivot lows which acted as supported turned into resistance with the resultant continuation of the downtrend. This technical knowledge can be used in a similar fashion during the up trend with resistance levels now expected to act as support on any price weakness.
Pioneer Natural Resources Company (PXD)
Pioneer Resources (PXD) has formed a bullish reversal pattern called an inverse head and shoulders. This pattern is made up of a central pivot low called the head and smaller lows on either side which make up the shoulders. A bit of imagination is needed to see this pattern as it doesn’t always form perfect text book examples in real life. The pattern below has the appearance of two heads which could also be considered a double bottom.
On Monday the price broke upwards and closed above the neckline which provided our trigger signal to go long. Confirmation of this setup was provided by the bullish cross of the 20 and 50 day exponential moving averages and the reversal pattern taking place at a previous support level.
Traders can look to go long with stops placed under the neckline and a target close to the next resistance of $220.
Trading the Bullish Wedge
Some of my favourite technical setups are the bullish breakout trades from flags,triangles pennants and wedges. For today’s blog I thought I would provide the technical explanation of a bullish wedge and provide an example of a stock that showed such a breakout on the US market yesterday.
A bullish wedge is found in an uptrend and is formed with the convergence of downsloping trendlines. The preceding up trend runs out of steam as buyers take profits and push prices lower. The retracement should take place on reduced volume. As the price action converges towards the point formed by the trendlines a breakout occurs which in the case of the bullish wedge is to the upside.
The breakout candle should occur on strong volume with a closing price near the high of the day. Both of these signals provide a higher probability trade and improve the likelihood that the signal is successful.
Targets can be calculated by measuring the length of the uptrend that preceded the wedge (dotted blue line) and extrapolating that from the breakout point as I shown above. A stop loss can be placed in several different ways with a conservative stop placed under the most recent pivot low. A tighter stop loss could be placed under the low of the breakout candle especially in the case of a long candlestick.
Scanning the US markets I was able to find an example of a bullish wedge breakout for United Continental Holdings.
United Continental Holdings (UAL)
The chart below shows the strong up trend that preceded the formation of the wedge with the breakout bullish candle yesterday. Ideally I would have preferred stronger volume but the candlestick closed very near to the high of the day forming a bullish candle in the process.
From a trading perspective I will look to enter in the region of the upper half of yesterday s candlestick with a stop loss placed just under it’s low as shown on the chart (LG= Long , SL=Stop Loss). My initial target would be two times my risk reward based on my entry and stop loss price.
Australian Sharemarket Trader Report February 20th
All Ords Index
The Australian sharemarket ended today’s session flat after data from China was released indicating activity in their factories this month was weaker than expected. The fact that China is Australia’s leading trading partner means any news from their market has a profound effect on our own sharemarket.
The market opened bullish today and headed towards the resistance level of 5450 before paring these gains after the news that China’s manufacturers reported tough business conditions over the past 6 months. Today’s price action has formed a bearish pinbar candlestick which may force prices lower over the coming trading sessions.
Stocks on the Watch list
Infomedia broke out from its bullish flag formation today and in doing so also manged to breakout from the resistance level established in August. The other bullish signal to note from this was the increased volume today which gives further evidence to this signal. I will look for a confirmation signal tomorrow in the form of an open above the resistance level of $0.655. If this signal is to prove successful and valid then prices will need to hold above this resistance level. A close below may signal a false breakout and prices could then begin to retrace back down.
TFS Corp (TFC)
TFS Corp has been trending up nicely since September with a series of technical breakouts. Over the past few weeks the price has been retracing in an orderly fashion after the strong move upwards from late December.
In the process a bullish flag has formed which was held up by the resistance /support level of $1.00/1.05. Today saw a breakout from the upper trend line as I have indicated on the chart below. I will look to enter tomorrow provided the price opens within the range of today’s candle. The round number value of $1.00 should provide an important psychological and technical support level.
On Monday I provided the following trading suggestion for Matrix Composites (click link). The chart from February 17th is shown below
The second chart shows the price as of the market close today. Since the breakout was identified the price has increased over 15% in little under a week. Well done to all those who managed to get on board with this trade. I didn’t unfortunately as my market order was not hit. The price ran away from me which is always a possibility with breakout trades.