Last week in Part 8, we looked at Trends, Support & Resistance. We take those ideas one step on this week, into the concept of patterns on price. Many think pattern analysis is created from a mystical land and disregard it without a second look! There can be strange names associated to the various patterns and this probably doesn’t help their legitimacy, but if you stop and think what the price is doing within these patterns, you can see the economics of supply and demand at work and this is why these patterns make sense and can be so effective. [Read more…]
Last week in Part 7, we looked at Market Breadth. We now start a chain of eight articles covering technical analysis directly carried out on price. We will be looking at patterns, support & resistance, trends, Fibonacci, pivots, moving averages, bands, indicators and Ichimoku. The first of the eight, looks at Trends, Support & Resistance. Understanding these principles will give you the necessary building blocks to understand price action and analysis and evolve your technical analysis learning. [Read more…]
Last week in Part 6, we looked at Equivolume. This week, we look at one of the more established and quite straight forward technical analytical approaches to gauging the sentiment of any given stock market: Market Breadth.
What is market breadth?
Market breadth is all about upward, downward and sideways movement and range, principally applied to stocks and their stock markets, to gain an understanding of whether the overall market is bullish, bearish or flat. The concept of market breadth is used to measure the ‘health’ of any given stock market. [Read more…]
The Australian Dollar (-0.53%) has been giving back strength since mid March’17 as commodity prices have disappointed and major business partners like China have shown a lesser appetite for Australian products and resources.
In the longer term momentum looks weak with the possibility of price now it looks to have broken some key Fibonacci / resistance levels possibly targeting another important Fibonacci target at 0.721? Price since Mar 2016 has been playing in a volatile range between 0.77 and 0.72, so a test at those lows may prove significant. If price does find support at those lows then the chances are price will head once more back into this range.
In the shorter term ahead of todays budget, AUD looks to be holding between the S2 and S3 around the 0.73’s (also just above a longer term Fibonacci support line), waiting on its outcome before deciding to take another move.
LON:VER currently trading at 19.672
Vernalis Plc has stayed on THE STOP HUNTER weekly Traders Club report now since Sep’16, making it one of the longest running ‘short’ stock ideas we’ve had over the last year. In that time it has produced over 100% return and just wont drop off! It is a good example to compliment my blog series on Technical Analysis as to how you can put the fundamentals and technicals together to make a solid trading strategy.
Fundamentally the outlook for the stock remains poor. On Stockopedia it holds just a StockRank of 1 and trades in the biotechnology / medical research sector that has also been under performing.
Technically the stock looks dire. It hit the radar last Sept as it broke through the Ichimoku cloud, backed up by various indicators. Trailing the stock down using a predefined technical analysis stop loss strategy / trade management strategy has kept the trade alive to generate the substantial gains. There have been various ‘sell in’ opportunities to take advantage of the continuing downward momentum.
Technically you would not favour the long side going forward. It would take a major fundamental event to turn the outlook on LON:VER bullish once more.
Short / Medium term technical levels (based off daily chart Fibonacci & Ichimoku levels):