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Analysis

Bet on Reversals and Limit Your Risks

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The S&P 500 Index (SPX) remains under the 2,600 mark and locked in a tight 13-point range. The S&P 500 Index (SPX) remains under the 2,600 mark and locked in a tight 13-point range. Indicators show that the index is still extremely overbought, and momentum is weakening. It briefly touched immediate support at 2,566 before closing at 2,578.9. The SPX must sharply pull back to have a shot at a sustainable breach of 2,600.

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With this view, we continue to focus on stock picks with limited risks but a lot of profit potential. Here are a couple of names that have recently reversed trends.

BK – Bank of New York Mellon Corp

BK has been on a downtrend for almost two decades after hitting its all-time high of 60.99. Technical analysis reveals a massive reversal structure after the stock breached resistance at 49. It is currently building a base at that level to sustain its momentum. The stock rallied after posting a higher low of 50.57. This indicates that BK is primed to make the next move up.

Accumulate shares to as close a price of 49 as possible. Buy more once it breaches resistance at 53. When it does, it is likely to hit 57 next. Take that out, and we get to 59. Last known resistance is its record high of 60.99. Break that, and we have a clear path to our target of 80.

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Should the stock break it’s support of 49, next line of support is 46 and then followed by 43. Strong support can be found at 36.

Weekly BK Chart

Monthly BK Chart

Summary of Strategy

Buy: 49 – 53

Support: 49, 46, 43 with strong support at 36

Resistance: 53, 57, 59, and 60.99

Target: New all-time high at 80

Useless: Only when support at 36 is broken

AZO – Autozone Inc

AZO is another stock that went on a downtrend after hitting its all-time high at 819.54. It posted a large bearish structure that led to a nosedive of more than $300 in value in a span of 25 months. Bulls defended support at 497 where the stock consolidated.

Yesterday, the stock rallied to a high of 633.24 before retreating and closed at 607.63. The action generated a candlestick indicating that AZO is not yet primed to make the next leg up.

This is good news as this provides you the opportunity to buy the stock at a discount. AZO may revisit its support at 583 which is a good level to accumulate shares. Buy more once the stock breaches resistance at 608 with a volume of at least 1 million. Breakout at 608 gives us a target of 720.

Weekly AZO Chart

Monthly AZO Chart

Summary of Strategy

Buy: as close to 583 with the intention of buying more when breakout at 608 is confirmed

Support: 583, 570, and 520

Resistance: 620, 671, and 702

Target: 720

Useless: Only when support at 493 is breached

Disclaimer: The writer has no investment stake in the stocks mentioned above.

Featured image courtesy of Shutterstock.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Analysis

Technical Analysis: Litecoin and NEO Jump as Bitcoin Trades near $8000

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The cryptocurrency segment continued its bullish run, as the total value of the coins climbed above $230 billion for the first time ever, while Bitcoin also posted marginal new highs. The most valuable currency is still overbought regarding the long-term picture, and we continue to expect a deeper correction in the coming period, despite the recent strong rally. Support levels are still found $7700, $7000, and $6700 while the $8000 level is ahead as a major obstacle.

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BTC/USD, 4-Hour Chart Analysis

Litecoin has been the most active major besides Bitcoin, as it rallied strongly after breaking out above the key $64 resistance and it breached the next target at $75 before heading below $70 again. The coin remains in bullish long- and short-term patterns, and we expect a move above the major resistance zone ahead with the next target found at $82.50.

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Litecoin/USD, 4-Hour Chart Analysis

NEO is showing strength in the second half of the session, while Monero is recovering well from a short-term dip, similarly to IOTA and Ethereum Classic. Ethereum continues to represent stability in the segment, while Ripple failed to build up momentum so far after yesterdays spike higher. With still most of the altcoins being in bullish setups, let’s see the short-term charts.

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Analysis

XRP Looking to Make a Significant Rally

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The XRP/USD pair went into a deep correction after hitting 0.29490 a month ago. It nosedived to the major support level of 0.19052. The pair consolidated for a few weeks which gave the market the legs to test resistance at 0.22924.

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Technical indicators show that the pair was ready to breach its immediate resistance, which it did this morning. Now that resistance has broke at 0.22924, it’s time to buy. This successful breakout will take the pair to 0.23997 first and 0.26563 next before hitting the target of 0.26796 which is coincidentally a major resistance level.

Technical indicators hint that the market would most likely be overbought by the time it hits 0.26796. Should it respect the major resistance level, the likelihood of the market turning extremely bearish increases. Therefore, it is recommended to closely watch your trail stops to preserve your gains.  

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Summary of Strategy

Buy: As close to 0.22924

Support: 0.22224 and 0.20081

Target: 0.26796

Stop: If the market breaches 0.20081 as next reliable support is 0.19052

 

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Analysis

Technical Analysis: Ripple Breaks Out as Bitcoin Tests Highs

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Cryptocurrencies are having another bullish session as the total value of the market surged to a new all-time high near $225 billion, with the help of the rally in BTC and Ripple, and despite the drop in the value of Bitcoin Cash. The most valuable coin its record high yet again after the brief but steep weekend correction, despite the still overbought long-term picture. We still urge traders and investors to wait for a deeper correction before entering new positions here, with support levels found at $7000, $6700, and $6000.

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BTC/USD, 4-Hour Chart Analysis

Ripple has been the other main mover of the day so far, as the coin skyrocketed on huge volume and breached the $0.26 level before turning lower and stabilizing near $0.23. The coin triggered a short-term buy signal by moving above $0.2250 and it remains bullish on both time-frames, despite the pull-back, with another major target level ahead at $0.30.

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Ripple/USD, 4-Hour Chart Analysis

The other majors are little changed expect IOTA, which further added to yesterday’s gains and reached overbought readings, while Ethereum Classic and Dash continue to drift lower in short-term correction patterns. Let’s see the detailed analysis of the short-term charts.

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Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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