Thursday, July 30, 2009
Wednesday, July 29, 2009
This is the weekly chart of GSFC a stock bought to my notice in the morning by a good friend Mansukh from Bangalore. He was convinced about the fundamentals of the company and I on the other hand liked the chart (ignoring the sell off today)!
Well we both ended up buying some quantity of it at 147 odd levels which we both felt was a good place to be long. Expecting the 130/35 to hold and then hoping it would go up to test 190 for starters! Hmmm this one is in the investment kitty by the virtue of its fundamentals!
Friday, July 24, 2009
A couple of my charts I had posted before this had been more of the Cup N Handle Pattern! Why I like CNH in particular vis a vis many other patterns is that CNH is a delight to look at and even more delightful to trade!
Look at the chart below showing a CNH pattern. Like I mentioned earlier CNH makes a nice picture but beneath that picture are many other factors which make it a pattern worth trading!
CNH starts with a climatic decline (anyway it’s more powerful if we get to have it at market bottoms). Let’s take a look at the anatomy of the CNH;
Trend line A to B signals a change in the trend; first sign that the decline is getting arrested or at least slowing down!
The shaded potion (blue) C to D is the accumulation zone (mostly the mutual’s or big guys eat here!) Here we also test the bottom and cement it and look for the breakout out of this accumulation zone.
The shaded (green) E to F is what we would ideally refer to it as a handle here. But if you are not looking it as a CNH pattern then you can label it as the FLAG or simply put the first pullback! This is to test the resilience of the stock and also to shake out a few wimps!
By the way if you connect the two troughs of the CNH with a trend line (not shown here) you end with a huge ascending triangle pattern in your hands! Therefore with so many bullish signs the CNH in itself becomes a good pattern to trade!
The idea behind the post is that PRICE being dynamic will show you many patterns within each other to confuse you! Patterns are not written in stone, they do fail many a times and as traders we don’t have any control on them. But we do have an important control on something that no other trader not even the market can take from us “We have control on what we decide to give to the market in case the trade doesn’t go in our favor”. Yes we have the power of THE STOP! Use it...Use it…and Simply Use IT!!!