I've been eyeing this counter since CJ mentioned buying it months ago. It had been interesting academically then but it only became interesting to me when a buy signal is triggered recently. I got in a 1.84 when it hit my overnight queue order and had been rising for the last couple of days before the party stopped. I cashed it out when it hit my tp of 1.96 3 trading days later. Since I had covered the full MA channel for this trade, I'll say it's a pretty good one.
Of course, on hindsight, it could have been better if I waited 2 days later because the price went up to a high of 2.05 before coming back down to 1.91/1.92 at last close. It's really important to leave when the party is still on. I do not want to leave when everyone is leaving. And so because of this, I would always have to leave some run behind for others, which is perfectly fine with me. If I had 2 batches, I would have cashed out a batch at 1.96 and another one at 2.00, near the value zone of the weekly. But since I had only 1 batch, I don't want to change my tp on the go and adjust while I'm still in the trade. That happens so many times before - I changed my tp in the middle of the trade, and it came crashing down on me. No more of such things in the future.
Is it a good time to re-enter? That's the thing, I'm unsure now. The weekly says there's more room to run (though I don't like the last candle on weekly), the daily says hold it first. I'm hesitant because if you take the movement from 1.83 to 2.05, the pullback that we see the last couple of days can hardly be called a 'retracement'. It could be the more macro environment pulling its weight on this stock, who knows? I'll be watching 1.88/1.89. If that happens and there isn't something better that comes along, I might just return for second round.
9 comments :
Hi LP,
I enjoyed this analysis. I guess that's normal since I am vested. ;)
I divested mostly at $2.00. I changed my $2.04 (100dMA) queue to $2.08 (200dMA). Otherwise, it would have been a 100% divestment. Oh, well.
Increased exposure at $1.92/$1.91 in the last session. I am also eyeing $1.88 as the next support and a probable gentler uptrend support. :)
Hi AK,
On hindsight everything looks nice haha :) But it's a good profit already, from your buy and sell price, right? :)
Hi LP,
Haha.. I was greedy lah. Was wondering if it would go past $2.04 to hit $2.08. Well, it did touch $2.05. Haha..
I got a hint of what it would feel like to be playing a game of chance. Me bad. ;p
Hi LP,
May I know what are the signals that trigger the buy signal? Would you care to share ur trading system? Is ur trading system same as the one recommended by Dr Alexander?
From my observations, you entered based on these signals. Correct me if I am wrong :)
1.)Forex index and MACD line divergence on the weekly chart
2.)Forex index and MACD line divergence on the daily chart
May I know why did u place a buy queue at $1.84? Is it because of the possibility of a double bottom?
The MACD line divergence is considered at Class B. Is the classification of divergence signal important?
Did you place at TP at $1.96 because it is the top end of the 20d EMA envelope? Do you use 20d EMA envelope for all the charts you analyse or change them according so that only 5% of the price action will be outside the envelope?
Pardon me for me long list of questions. :)
Ao
Hi Ao,
You're right. It's based on Elder's system. Btw, FI is force index, not forex index :) Let me answer point by point:
1. Generally yes. But the ultimately rule is that I'll trade on daily if there's no bearish signal on the weekly. If there's no bullish signal, I might still trade.
2. MACD histogram divergence is what I'm looking out for, mainly. If there's FI and macd line divergence, that's even better.
Q. May I know why did u place a buy queue at $1.84? Is it because of the possibility of a double bottom?
A. I got in at 1.84 because that's the support level. It's likely to form a macd histo divergence too, if the price hits 1.84. I didn't expect it to turn around upon hitting it immediately though, so that's just pure luck.
Q. The MACD line divergence is considered at Class B. Is the classification of divergence signal important?
A. Yes. Class A is most likely to work out fine. Class B is moderately likely and class C is the least likely. I tend to trade only class A and B. B is hard to catch it though.
Q.Did you place at TP at $1.96 because it is the top end of the 20d EMA envelope?
A. Yes, 1.96 is both the resistance level and the upper envelope. I also want a min of 5% ROC on the trades I made, so 1.96 is just about there.
Q. Do you use 20d EMA envelope for all the charts you analyse or change them according so that only 5% of the price action will be outside the envelope?
A. I change them so that it includes 95% of the price action, yes. But I have to adjust it manually using chartnexus, so it's a rough guideline for me. For this particular chart, I didn't adjust it properly, so it's approximately at 1.96 only.
Seems like you know a lot about elder's system too :)
Hi LP,
Thanks for taking time to reply. I still got somemore question to ask you. You mentioned that:
1.) "But the ultimately rule is that I'll trade on daily if there's no bearish signal on the weekly. If there's no bullish signal, I might still trade."
Q: What kind of bearish/bullish signal are you refering to? Do you mean MACD divergence and Force index divergence?
Q: Do we consider MACD line divergence after MACD lines cross with each other or when the MACD line is forming a lower high or high low but the MACD lines have not cross with each other?
Q: Is the spike in the 2d force index on 16 Decc 10 considered a blow off move? And this means that the downtrend is about tocome to an end.
Q: Do you look at the weekly chart first before looking at the daily chart?
Q: Do you use MACD histogram divergence with S/R lines?
I have read "Trading for a living" and "Come into my trading room". But I have not encountered people who implement elder trading system in singapore market. Currenly, I am reading "Sell and sell short" :)
Hi Ao,
Np, glad to help out.
Q: What kind of bearish/bullish signal are you refering to? Do you mean MACD divergence and Force index divergence?
A. For weekly, I'm more open to all kinds of signals. it could be macd histogram divergence, FI divergence, macd line divergence, macd lines cross over, good candlestick pattern etc. I'll put more weight if it's FI divergence and macd divergence on weekly.
But for daily, I'm almost always looking out for FI and macd divergence only, coupled with s/r.
Q: Do we consider MACD line divergence after MACD lines cross with each other or when the MACD line is forming a lower high or high low but the MACD lines have not cross with each other?
A. I look at both (macd lines cross over and macd divergence) actually, but I put more weight on macd histogram divergence. This is when the price drop to a lower low but the macd histogram exhibit a higher low, thus forming a bullish macd histogram divergence.
Q: Is the spike in the 2d force index on 16 Decc 10 considered a blow off move? And this means that the downtrend is about tocome to an end.
A. Yes, I think the downtrend is about to come to an end when I see a FI spike down. But the same doesn't quite apply when the FI spike up.
Q: Do you look at the weekly chart first before looking at the daily chart?
A. Actually I look at daily first to scan for macd histogram divergence. If there's a potential one on daily, I'll look at weekly to see if it supports that view. As mentioned, as long as there's no bearish signal on weekly, I might just trade. I use the weekly as an 'NOT' indicator. If the weekly shows bullish signs, I can sideline or long but I do not short. If the weekly says neutral, I can sideline, long or short. If the weekly shows bearish signs, I can sideline, short but I do not long.
Q: Do you use MACD histogram divergence with S/R lines?
Yes. For TA, I find that adopting a 'weight of evidence' is important. Each piece of evidence you use will form an opinion until the evidence is strong enough for you to act on it, or not to act.
I assure you it works in sg context as much as elsewhere.
Hi LP,
Thanks for the reply :)
May I know what is the stop loss that you had in mind if any? As it is possible for the price to go lower and yet still forming MACD histogram divergence.
Ao
Hi Ao,
I've no stop loss in mind. These days, I trade only fundamentally sound companies which I'm willing to hold for extended period of time without stop loss. But if I'm trading pennies, then there will be a stop loss. The stop loss is usually set at the lower support level, or the trendline support.
MACD histogram works on the premise that the price shows a lower low but the macd histogram shows a higher low. It's thus imperative for the price to go lower before the macd histogram divergence is even valid.
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