Tag Archives: double top

When a trend stalls

Evening all,

Pardon my inactivity for the whole year. I feel that my writing frequency has gone down like how my trading frequency has. In part, the local market threw me quite a number of surprises – but that is what money management and rational decision-making are for. US indices have recovered very strongly from the slight scare a few months ago, and other global indices have taken cue. Locally, the STI has drifted slightly higher, and continued strength will mean quite a good showing for the STI. My watchlist, however, shows a very mixed bag of performances by counters of different levels of market capitalization. Quite a while back, I got into Osim – O23.SI – when it was below $2.00; I posted a few articles during that time. As time passed, Osim kept climbing while financial reports posted positive numbers. Market sentiment was more or less like the chart – not much opposition and mainly praise. When “all sides” seem to agree with one another, it culminates in an easy trade to hold on to. I never had a reason to sell – so I did not.

os

In the chart below, I set the data range from the start of 2013 to the present day. The last two years of Osim’s stock performance are probably satisfactory to a trend-follower: steady up trend, small and mild correction, and a second leg of gains. Straightforward story, straightforward trade.

Only, Osim has started to tank: after hitting an all-time high of $2.94 in March, 2014, Osim has been trading sideways, and the latest trading session brought the 200-day MA into focus.

os2

Strong resistance above $2.84 is born out of the failure to hold that level on numerous times – as highlighted in red. Taking a slightly macro view of the chart, I see two regions that look like the peaks of a simple double top formation. An interesting thing to note is that the 200-day MA is near the neckline of the potential double top formation (which is bearish, generally-speaking) (see if you can spot another one in the middle of 2013), which only serves as confirmation of further downside if Osim does not start finding support. A bearsh indication on the chart is an ugly gap (circled in aqua). The gap came with tremendous volume, and the selling does not seem to have stopped. The picture this year looks worrisome. Some upward movement may be expected since Osim is near a good support zone. After tanking for quite a while, I will consider Osim as flat, so I expect a small rebound. A few more weeks will give a better picture if the market thinks Osim is now trading at a fair range or if Osim should be priced significantly lower. Are the good financial results taking a turn soon? Some more time will give me a better idea. As for now, it does seem like I have sat on Osim for long enough.

os3

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Advertisements

Convergence in ASX

Evening all,

Short post on the Australian bourse for today. The ASX came off highs at the 5200 region along with global markets. The picture on the chart is a classic double top topping pattern with slightly higher highs for the right-hand side peak. A breakout below the neckline signalled confirmation of the pattern, and the downside target was hit with ease. Now, the ASX is flirting with the 200-day MA, and a possible reversal kind of pattern may be in the making. The ASX made two dives down to make recent lows; the second one crept below the first by a small margin (see two blue arrows). Indicators are doing the opposite of price action by making higher lows in the same time period. This is a simple illustration of a bullish convergence. I strongly believe in divergence and convergence signals from indicators. So, let us see how this pans out.

asx

 

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Update on several counters

Hello all,

Today, I am reviewing some of the counters I posted about in the last couple of months.

First up, Lian Bneg – L03.SI. I was on the bullish side for Lian Beng, and Lian Beng did not disappoint. L03.SI broke out from the then potential bull flag and made a recent high at 43 cents. Price has since pull back down. The lates chart pattern I see is an upward parallel channel. Since we are near the bottom of the channel right now, I will look for buying pressure to come in; though it seems Lian Beng may go down further to test the 200-day MA.

Next up, Yangzijiang.

BS6.SI is now trading out of a confirmed double top pattern. The neckline comes in at $1.23. Based on my last post on Yangzijiang, the projection of $1.12 comes into play.

Third, we have ComfortDelGro. In my last post on C52.SI – very late last year – I identified an unconfirmed inverted head and shoulders. ComfortDelGro broke through very nicely and climbed 8%. Strictly-speaking, my projection based on the technical pattern is $1.60. So I am looking for more upside. We’ll see how this one goes.

Next, Jaya Holdings.

Jaya’s price action has been frustrating. A symmetrical triangle I identified in the past is not playing out to either the upside or downside. Stagnation is sometimes worse than an unfavourable direction. You may be stuck with an outstanding position with your stop and limit in place, or even if you made the wrong call, sideways movement means you cannot reverse your view and position. In the chart below, you will see two triangles. The one in pink is the one that is already in play. Because of the rangebound market for Jaya shares, I am able to extend the trendlines to get another triangle (unconfirmed). What this simply means is that we have to wait and see still.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

 

Yangzijiang in unconfirmed double top. Jaya stalling

Evening all,

This is Yangzijiang, BS6.SI. Yangzijiang rallied very nicely out of its symmetrical triangle pattern (refer to last post on this ocunter). Now, just like the general market, Yangzijiang has been trading within the range of $1.23 – $1.40. The recent consolidation looks alot like a double top pattern. The neckline comes in at about $1.23. Confirmation of this pattern will occur when the neckline is breached. Using fibonacci retracements, the neckline also happens to be where the 38.2% level is at. If Yangzijiang decides to break through the neckline, then a natural target will be the 200-day MA, which is at $1.12 now.

Next up, I have Jaya Holdings. In my last post on Jaya Holdings, I identified an unconfirmed symmetrical triangle. I said that we should wait for clear direction before making any calls. Jaya made two short one-day surges in the last two weeks, but any upside was quickly followed up with slight downward pressure. No true breakout is seen yet, although strictly-speaking, Jaya has made an upward breakout but is holding on to triangle support (black circle) at the 54 cents region. Seeing how Jaya is not heading up decisively, I would be worried if I were long this counter.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Important levels in Gold

Good day traders/investors,

I have a post on Gold for today. This is my first ever on this blog  but I hope to share my analysis on this precious metal more often in time to come.

The last week, Gold price fell from the $1,700 region to the $1,600 region. The 100-day moving average is being tested at the moment. In general, I am bullish on Gold in the long-term and mid-term. Right now, most people are also probably bullish on Gold’s prospects; though we have a camp of people who believe Gold was grossly overbought  at $1,900 levels. As a technical analyst, I will only turn bearish on a financial instrument’s prospects when I see large consolidation patterns on a chart; also, long-term moving averages are very important in determining general trend directions. Right now, I do not see any reason why Gold should correct greatly down to $1,000 – $1,200 levels. The general uptrend is still strong despite last week’s sell-off. Price is still healthily above the 200-day MA. I plotted fibonacci retracement levels taking the low as $1,000 and the high as Gold’s record highs at the $1,900 zone. So far, recent price action has been situated above the popular retracement percentage levels. The 38.2% level is at about $1,550 – which should become a natural near-term downward target for me.

 

Zooming in, I see a confirmed double top pattern. After running up to all-time highs of $1,900, Gold lost steam and plunged below the neckline of the pattern last week. Taking the height of the pattern and projecting downwards, we coincidentally get the $1,500 region, which was a target we talked about earlier.

I believe now will be a good time to build up a long position on Gold for long-term investors using a dollar-cost averaging strategy. At $1,500 – $1,600, this represents a 20% discount from all-time highs – certainly attractive for me.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

 

Cosco not looking good

Evening all,

Recently I have not had much time to come online, so you do not see much updates here. I will probably be quite busy until the end of next week at least. After that, I should be able to resume with 2 or 3 posts each week. I hope to see you all around again. Today, I have a post on Cosco Corp – F83.SI.

In my previous posts on Cosco, I kept a huge upward parallel channel on the chart. Below, you will see that price is now – strictly speaking – under the long channel. I will stop short of saying that Cosco has broken out of a steady, huge channel as I prefer to wait for some more days before considering the breakout a true one; however, I must admit Cosco’s share price is now looking very bearish. Breaking down from a channel is not a good thing.

Apart from a bearish-looking breakout, the chart has showed me other bearish signs as well. I believe very much in identifying chart patterns, and in this case, I have a confirmed double top pattern in Cosco’s chart. I do not like this pattern very much because I do not find it reliable enough for trading. In fact, I think most experienced chartists may also not respect this pattern. I am highlighting it here as it matches with other bearish signs on the chart. Next, Cosco has been rejected at the 200-week MA – not once, but twice. This is certainly a bearish indication; also, the 200-week MA is starting to turn down.

On the daily scale, note that price is now clearly below the ever-important 200-day MA. Further, the 50-day MA is close to crossing down below the 200-day MA. How bearish can you get?

With so many bearish indications on the chart, I am going to hold quite a bearish stance on Cosco. I have added in fibonacci retracements study onto the daily chart below – the high and low taken are the high and low of the huge upward channel. Right now, price is finding support at the 38.2% level. If what we are seeing now is a true breakdown from the channel, we should look for much more downside in Cosco.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

 

Capitaland turnaround

Hey all,

Looks like my last several picks have not gone as what i hoped would happen. Anyway, i would like to share my thoughts on Capitaland, C31.SI, which i said looked very bullish the last time.

As of now, my view on C31.SI has changed from bullish to bearish. On the chart, i see a double top. Although i do not always “trust” double tops and bottoms (due to their common appearances), other events on the chart do indicate to me that the pattern should be followed. Clearly, Capitaland seems to have problems with holding on to its “pre-crash” level. Two short trips to $4.40 ( forming the two peaks) and price going straight down to pre-crash level of $4.13s.

Lastly, to top it all off, C31.SI gapped down well below the 200 day MA. As a chartist, i have to have a bearish stance for C31.SI. Most indicators are looking for downside in price as well. I have the RSI put up to show you just that. The RSI is at 19%, and pointing downwards. This tells me that more downside should be realised in the weeks ahead. However, a projection based on the double top pattern gives us a target not too far away from where we are now.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Big picture analysis.

Good evening everyone.

The past few weeks have been rather rocky for me. Bad calls, conflicting analysis, etc. I decided to take a broad step out and look at things with a long-term horizon, and to tell myself what kind of mindset i should have trading/investing in the next few weeks. After working on some charts, i have things to present to you.

Lets take a look at the correlation between the Dow Jones Transportation and the dollar index. The charts are weekly ones.

We can see how both of them move in opposite directions in general. And very recently, the sliding dollar together with the equity market rally.

EquityDollar

With that, i would like to talk about the US dollar. Remember, i try to talk only about the “technicals” here, so i would not be commenting on whatever the Fed may do..etc… . From the chart it seems like we have found support at $75. That is possible. Based on the downward projection from the double top, we should expect price to hit $74 dollars, $1.00 off! Indicators are telling me that the dollar is just coming out of oversold territory- a slightly bullish signal. Basically, i am expecting, based on my analysis, the dollar to strengthen in the long-run. We have already realised our break down from the massive double top, found support, and indicators tell us we are just popping up out of oversold areas. I would prefer to wait for the dollar to brea up out of its downward parallel channel, for me to be a bull on the dollar.

USDollar

Now, on to the Dow Jones Transportation.

First, i have done some fibonacci studies on the weekly chart of the DJT.

DJT Fib studies

Next, support and resistance studies. We have formed a double top, showing us how the Transportation average failed to break above 4000, into the zone where price was “free-falling” last year. I will show you the double top on the daily scale. But for now, based on fibonacci retracements, we have support coming up at 3300s, which is price formed a small consolidating base. I think that is a very important level, also because of the double top pattern. Finally, look at the MACD indicator, which i like to use in long-term analysis. Though a divergence/convergence would act as a better signal, what we have now is “bearish-looking enough”.

Weekly DJT

Next, using the daily chart, lets see what we can come up with.

Okay, the double top that is clear on the chart has already been materialised. The last candle does not look too good either. A rally, then a close near the open/low. Very importantly, we have broken down from a support trendline. I do not know about you, but that is vital to me. A connection between March lows to the end of the consolidation(between 3000 to 3400). Thats is bearish looking. Technical analysis 101: going under a support trendline! Lastly, i like the look of the set-up because a downward projection would put us to where the support of 3300s is. Coincidence? Lastly, it is interesting to note that the 200 day MA lurks right below the support. Look for the Dow Jones Transportation to hold at the heavy 200 day MA.

Daily DJT

Alright, thats all i have to say for tonight. Please tell me what your analysis leads you to think. I believe we should see selling off in the next weeks. I like the fact that the dollar should rise, after finding good support. This would agree with the assumption of a downward movement in equities.

All in all, if i am wrong, the markets change directions, and new events pop up on the charts, i will simply follow what the charts tell me and turn bullish. As for now, i do not think our long rally would continue.

Goodnight.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.