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1.2.13 Wednesday
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Long Term Uptrend Support
(Daily Chart 9/10/12 – Present)
We have been forming some base here at this uptrend support line that has been established since June 2011. This uptrend support line is very strong line as you can see that it has been touched multiple times and hasn’t been broken yet.
I like the fact that we did consolidate on that support and possibly we can find some momentum to pop. But the question is are we going to able to break that recent resistance of $27.70 anytime soon? I don’t know and no-one knows and so we will have to wait so we can take a ride along when it does break.
100SMA Has Been Served as Strong Resistance
(Daily Chart | 50EMA-Pink, 100SMA-Blue))
Currently held down by 50EMA and that recent resistance. Upon breaking out to the upside, next target would be at around $29.00 where 100SMA is hanging out (see arrows). 100SMA has been acting as very strong resistance for sometime now so if or when we get to that level, must watch that line. That could be a good short-term target as well.
Bullish Divergence
(Daily Chart | Stoch, RSI, MACD, MFI)
These divergences are not as strong as the real divergences (stock making lower lows) but stock has made flat bottom while the oscillators have made higher lows. It’s still a positive divergence but it’s not as potent as the other one. But its better than nothing and it definitely gives us some bullish edge here.
Bullish Divergence Back in 2006
Here is my plan
- Upon break out above 50EMA ($28.00), I will enter long positions
- Stop below 50EMA
- Next target 100SMA = $29
- Higher targets = $30.00, $31.60
Cautionary Scenario
- Upon break out stock might rise a day or two however it might wants to test the old resistance as new support at $27.70 level so be aware of that (it might even do that on the same day it breaks out).
- Watch out for whipsaws where it gives you a head fake and goes right back inside the consolidation box
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1.15.13 Tuesday
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Entered Long @ $27.01 (Just after clearing 20EMA)
(20EMA-Light Green | 50EMA-Pink)
Two concerns:
- Decreasing volume (Need volume spike to support this possible bullish run)
- 50EMA (see arrows) will be acting as resistance (Need to close above that sometime this week to continue bullish)
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1.18.13 Friday
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Still Holding Long Positions / Critical Level Here
We saw what happened on that 50EMA (see green arrows). We couldn’t close above 50EMA, $MSFT rolled over and we also saw when 20EMA (see red arrows) couldn’t hold up, it rolled over. So what needs to happen is this on Monday, it needs to close ABOVE 50EMA or else, there is a high possibility that it’s going to roll over yet again and continue it’s tight channel range.
Even clearing 50EMA won’t be enough because top of the channel resistance is at around $27.70 but closing above 50EMA with good volume will give bulls that much momentum to possible break above that channel resistance. Last two days of volume has been pretty solid but we will probably need even more volume to push through that 50EMA and the channel resistance of $27.70
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1.23.13 Wednesday
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Nice Move But Resistance Coming Up
What a move today! We pushed through 50EMA (pink) and now hanging out just below our resistance (red horizontal line). Volume isn’t great but isn’t bad either so I am really hoping that we could push through this resistance line tomorrow and close above it otherwise we can see another roll over. And which that would create tight channel on this stock. I might tighten my stop depending on the price action but strong move today nonetheless.
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1.24.13 Thursday
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Closed out Positions @ $27.76 before the ER Tonight
Earnings tonight and I decided to close it all out. Probably re-enter after ER.
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1.25.13 Friday
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Re-entered Long this Morning @ $27.94
50EMA / recent uptrend support doing what it does best (supporting or resisting). We did manage to close above recent resistance of $27.75 but I do not know what to make of today’s candle. It’s like a giant spinning top which gives me some kind of indecision here. But seeing 50EMA support and closing above resistance, I am STILL bullish on this stock and I think it was good idea to get back in long this morning.
Weekly Chart Oscillators
(Weekly Chart | Stoch, RSI, MACD, MFI)
Week ending candle looks good as we are starting to establish some good bullish trend here. Also take a look at these Oscillators. They are in early stage but giving some good buy signals. According to this weekly chart, next major resistance would be at around $28.50ish.
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1.29.13 Tuesday
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Falling Volume is a Concern
We must close $28.25 sometime soon with some volume spike otherwise we might start to roll over here. We made higher lows last 4 days but volume has been making lower highs.
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1.31.13 Thursday
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Trade Finished @ $27.56 with Profit
15 days of bullish trade ended today as I got stopped out just little earlier. Wasn’t impressive move but I will take it. If close below 20EMA, its going back down to the $26.40 vicinity. I might think about getting back in long if 20EMA holds and overall market is continues to rally.
What made you decide to get away from your plan of waiting until it clears the 50 EMA?
@55options good question. My risk vs reward ratio was great as soon as stock cleared 20EMA because my current stop is just below yesterdays (doji) low and thats also below 10 and 20EMAs. So it makes great place for a stop.
Clearing 50EMA would’ve been a good trigger if on the 3rd,if we could’ve continued bullish but instead we rolled over.
50EMA would probably be more safe but we also have to think about that resistance $27.74 which is just above 50EMA. There aren’t good place for a stop if i triggered above 50EMA. So I decided to pull the trigger early.
Looking at the weekly chart, seems this could be forming the third point of the new downtrend line. But with so many positive oscillators and that strong long term uptrend support it doesn’t appear likely.
@LittleRiver i see wut u r talking about the weekly downtrend line. remember its not confirmed downtrend because the 3rd point has not been rolled over yet.
@2kaykim Thank you Kay. I am learning little by little here by following your TA. Started reading the Nison book you recommended some months ago. Very eye opening and I am only 80 pages in. Thank you !! I am trying to wrap my head around why resistance decrease the further one goes down the trend line. I imagine one factor is as time passes those stuck higher up the line eventually sell making it easier over time for the bulls to regain control?
@LittleRiver well the potency of the trend line decreases once it has been breached. That same trend line could work as resistance but not as strong if it has been breached once. So as long as that trend line has not been breached and continue to go down in trend, it actually becomes stronger. Also you must understand that market can and will do whatever it wants to do. These rules only apply in probabilities.
@2kaykim Thank you Kay . I have much to learn. Thank you again for taking the time to teach.