Planet Wealth - Australian Stock Market Education » Technical Analysis

XOA Shows Strong Bullish Signal

Planet Wealth — Sun, 12 Jul 2009 13:04:32 +0000

The XAO rejected the Head and shoulder neckline we spotted last week and used past resistance and Moving Averages (MAV) as support for the bounce.

This is currently a strong bullish signal. The next resistance level is 4050. However if support at the Mav’s and weekly support line fail, the next area of support is 3500.

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XOA Still Showing Bullish Signals

Planet Wealth — Fri, 03 Jul 2009 14:19:33 +0000

The XAO this week, retraced any ground made up last week. Alot are wondering if the is a sign of the bull run ending.

The short term trend is still up and this has not yet been broken. The two significant Moving Averages (MAV) have crossed over to a bullish indication. It currently sits on an area of four major supports. A weekly support line, a six month up trend line and two MAVs. This is showing the odds are stacked in favour of a rebound and trend continuation next week.

However, there is a small head and shoulder pattern on the daily chart which is a bearish signal if the neckline is broken. If the head and shoulders pattern was confirmed it would be in the opposite direction to the current trend. This makes it less likely to be confirmed, but is still a possibility.

For the moment the charts are still indicating bullish.

XOA Showing Signifacant Bullish Signal

Planet Wealth — Sun, 28 Jun 2009 14:15:31 +0000

Early in the week, the XAO had heavy moves to the down side but managed to gain back most of the losses by the close of session Friday. In all the talk about how far the market could fall, was there signs it would be short lived?

As seen in the daily chart below the XAO has two key Moving Averages (MAV) that the XAO has respected over the last 5 years.

When taking a closer look at the daily chart, it’s evident the crossover of the two MAV’s happened prior to the market fall this week. This cross over was a bullish signal that had added strength by the higher peak created above this. Though the drop was quick, technically it would have been reasonable to expect support at the MAV’s, which is what happened. Now there is and Higher Peak (HP) and a Higher Trough (HT) above bullish crossed MAV’s. This is a significant Bullish Signal.

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Buyers Coming into JHX

Planet Wealth — Thu, 25 Jun 2009 03:54:21 +0000

When considering a position in the Market, know if the buyers or the sellers are in control, is key. Technical Analysis techniques can help us determine who has the control.

Peaks and Troughs is a very powerful tool to use when looking at who is in control. Higher Peaks and Higher troughs tells us the buyers have control as there are new highs (PEAKS) being made each rally. And on each pull back the low (TROUGH) is higher than the previous low.

Keeping an eye out for a change in role can keep us out of a turning market and help to change our view early on in the new move to take full advantage.

JHX chart has recently indicated that the sellers are losing control and the buyers are coming in stronger. The buyers have been able to push through the previously respected down channel in late March. This also created the first higher peak. Now there is a pull back in play. If the stock rebounds off the channel’s top trend line and support at $3.80, a higher trough will be created. This is confirmation the buyers have taken control and the stock is likely to see at least the previous high at $5.15 or next resistance at $5.50.

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XAO Uptrend Channel Continuation

Planet Wealth — Sun, 21 Jun 2009 12:24:58 +0000

This week saw the XAO pull back strongly off the top off the current uptrend channel. Will next week continue the pull back or is there enough support to have it bounce back.

The pull back this week is a continuation of the uptrend channel. This was stronger than the previous support level at 3900. As it broke through the support line it is likely continue the pull back to the bottom of the channel before continuing up.

A less likely but possible move would see the XAO bounce this week as it has paused on a 61.8% Fibonacci retracement level which could provide support.

Overall, the pull back that has happened is still part of the bullish run over the last 3 months. However should the XAO break down and out of the current channel, we will likely see 3700.

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XAO Now in an Up Trend Channel

Planet Wealth — Fri, 19 Jun 2009 00:17:52 +0000

April saw the XAO break the 12 month down trend. Where is the next significant resistance we are likely to see a pull back.

After breaking through resistance at 3700 and the 12 month down trend, the XAO has now formed an up trend channel. The next major resistance is an intersection of the over all bear trend that started in October 2007 and a significant resistance line on the weekly.

This intersection meets at 4250. It is likely this resistance will be retested and there maybe a pull back. A breach of this will see 4700 as the next resistance and possibly the confirmation of a Bull Market.

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NAB in Consolidation Pattern

Planet Wealth — Tue, 26 May 2009 14:19:03 +0000

March and early April saw all the banks rally hard with the rest of the market. After this rally there are signs of weakening in many. NAB is one of those stocks.

Nab found resistance at $23.50 after the rally. This resistance level has been valid as far back as 1999 and is also the intersection of well respected Moving Average (MAV). From there the stock consolidated between $23.50 and $21.00. $21.00 has been a strong support made by a weekly support line, a 6 month up trend line and the 38% Fibonacci retracement level. The consolidation is showing signs of failing with a Lower Peak (LP) being formed.

The Support and resistance that has been keeping NAB in consolidation, are strong a there is multiple resistance and support lines at each level. Probabilities suggested a pull back is more likely. If this is to happen the next support is $19.00 and also the 62% Fibonacci retracement. Should NAB break up$26.00 is the next major resistance level.

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Fibonacci Numbers in Trading

Planet Wealth — Tue, 05 May 2009 00:29:12 +0000

The Fibonacci retracements pattern is a powerful tool used by technical traders to identify reversals on a stock chart. Let’s take a look at the Fibonacci sequence and show some examples of how you can identify this pattern.

Fibonacci numbers were developed by Leonardo Fibonacci and it is simply a series of numbers that when you add the previous numbers you come up with the next number in the sequence. Here is an example:

1, 2, 3, 5, 8, 13 - See how when you add 1 and 2 you get 3? Now add 2 and 3 and you get 5, and so on. So how does this sequence help you as a technical trader?

Stocks have a tendency to change direction when they come to the 50% and 61.2% levels. There are more level used in Fibonacci but these two are the most common and powerful to use.

To use the Fibonacci tool take the low point and high point of the move. If a stock has been bullish, place the tool at the bottom of the move and pull it to the top. This will give you your levels. You will also notice that the two levels of 50% and 61.8% will be support and resistance levels. This tool can be used on any time frame chart. Below is an example of the tool being used and how the stock reacts.

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The Importance of Moving Average Indicators (MAV)

Planet Wealth — Mon, 20 Apr 2009 00:30:34 +0000

No matter what style of trading or investing you do, there should always be more than one reason to take a position on a stock to ensure you are stacking the odds in your favour thus securing a long term future in trading.

A very powerful tool to use is Moving Averages (MAV). Nearly all basic charting software will have MAV built into them. A MAV can help indicate the direction of the stock. For example, the right MAV on a chart would show all bull moves above the MAV and all bear runs trading below the MAV.

The first thing to consider when placing a MAV on a stock you would like to trade is the length of time you want to be in the trade. Are you looking to take advantage of short moves of a week or so, or, are you wanting to invest in a stock for the next few years to get the most out of it? Once this is determined, it will give you a starting point.

Say you are looking at short term moves, chose small number MAV’s such as 8, 10 15 or any other number around this area. Place different ones on your chart and see which fits best and captures most of the move from past data. Buy when the stock breaks above and sell when it closes below. For medium term of say a few months to a year use a larger number and for long term buy and hold choose a larger number again.

The cart below has 3 different averages on it displaying the short, medium and long term moves a MAV can capture.

Remember each stock has it’s own personality and will therefore use different MAV’s to other stocks. This coupled with other information about the stock or chart you are reading can be a very powerful tool in trading and is well worth spending a few hours back testing to find some valid averages.

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Moving Average acts as Support and Resistance

Planet Wealth — Tue, 14 Apr 2009 11:14:30 +0000

CGG (Citadel Resource Group Limited) is another resource stock that is indicating it would like to climb higher. Let’s take a look at the weekly chart.

The stock started back in 2001 and had some down moves until 2003 when it started to climb again. The long term trend is up dating back to 2003 and today CGG sits on this trend line and has been testing it since December last year with Higher Troughs.

The Moving Average that is on the chart acts as a very good wavy support and resistance. Should the stock break up and out of the current Triangle Pattern, and through the Moving Average, there would now be several elements that would indicate this stock could climb higher. Higher Peaks to add to the current Higher Troughs, trading above the moving average and a bounce off the long term up trend line validating it once more. This stock could one to watch for possible buy opportunities.

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