Importance of Multiple Confirmations-Indicator Free Analysis
Indicator Free Analysis with Fibonacci Ratio Integration:
The above is a daily chart of Alkyl Amine, a quality monopoly stock with clear cut competitive edge in its respective industry. We can observe that a previous resistance was present at 4000 levels which was broken with big bullish harami green candles accompanied with volume. A basic rule of chart analysis is whenever a stock breaks out of its resistance, the resistance is transformed into a support. Thus the stock again comes back to the resistance level in order to check if it has turned into support. This is called retest or throwback. Here the stock has tested the 4000 levels 2-3 times and is now trying to head upwards.
In addition, if we draw a fib chart, we can see that the stock is taking support at the 0.618 levels which can be regarded as ultimate support zone.
We can also observe that a bullish Flag and Pole is formed which indicates upmove
How to trade the stock?
The stock can be traded in two ways depending on one's risk appetite and experience.
Entry:
For risky and experienced traders:
They can enter the stock after a bullish candle (such as that of today is formed) is formed with a SL below 3900.
For safe traders:
They can enter the stock as soon as the stock gives a breakout above the flag i.e. formation of a bullish green candle with closing above flag.
Benefits of early trade:
By entering early, the experienced or risky traders decrease their stoploss to a great margin. Thus it is possible for them to re-enter if the stock hits the StopLoss and again moves up.
Benefits of Confirmed Trade:
By entering after the breakout and retest of the Flag pattern, a safe trader increases the probability of success to a great extent.
Where should the target be?
The target should be the tip of the Flag i.e. 4750.
Where should be the Stop Loss?
For the early entree, the Stop Loss should be just below the support trendline of 4000 i.e 3900
For the safe trader, the Stop Loss should be placed just below the upper trendline of the Flag i.e. around 4100-4150
Hope you all learnt something..Support me by sending some cheers and liking all my ideas .
The above is a daily chart of Alkyl Amine, a quality monopoly stock with clear cut competitive edge in its respective industry. We can observe that a previous resistance was present at 4000 levels which was broken with big bullish harami green candles accompanied with volume. A basic rule of chart analysis is whenever a stock breaks out of its resistance, the resistance is transformed into a support. Thus the stock again comes back to the resistance level in order to check if it has turned into support. This is called retest or throwback. Here the stock has tested the 4000 levels 2-3 times and is now trying to head upwards.
In addition, if we draw a fib chart, we can see that the stock is taking support at the 0.618 levels which can be regarded as ultimate support zone.
We can also observe that a bullish Flag and Pole is formed which indicates upmove
How to trade the stock?
The stock can be traded in two ways depending on one's risk appetite and experience.
Entry:
For risky and experienced traders:
They can enter the stock after a bullish candle (such as that of today is formed) is formed with a SL below 3900.
For safe traders:
They can enter the stock as soon as the stock gives a breakout above the flag i.e. formation of a bullish green candle with closing above flag.
Benefits of early trade:
By entering early, the experienced or risky traders decrease their stoploss to a great margin. Thus it is possible for them to re-enter if the stock hits the StopLoss and again moves up.
Benefits of Confirmed Trade:
By entering after the breakout and retest of the Flag pattern, a safe trader increases the probability of success to a great extent.
Where should the target be?
The target should be the tip of the Flag i.e. 4750.
Where should be the Stop Loss?
For the early entree, the Stop Loss should be just below the support trendline of 4000 i.e 3900
For the safe trader, the Stop Loss should be placed just below the upper trendline of the Flag i.e. around 4100-4150
Hope you all learnt something..Support me by sending some cheers and liking all my ideas .