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Buy These Stocks to Leverage Reversals

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Asian stocks mixed

The S&P 500 Index has been on a tear since November of 2016. While many investors remain bullish on the index, technical analysis reveals that bearish patterns are emerging. A correction in the coming weeks after a year of unstoppable growth should be healthy to sustain the uptrend.  Investors and traders are advised to be cautious, and watch their trail stops carefully as technical indicators show that the index is extremely overbought.

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When the market is overbought, the strategy is to move away from stocks that have significantly moved up and favor names that are flashing signs of trend reversals. These stocks are most likely near strong support levels with tremendous upside. Here are two names following that theme.

AKAM – Akamai Technologies Inc.

AKAM has rallied from a major support level at 45 and is now looking to breach resistance at 54. The stock may still slide as 54 is a psychological resistance. When it does, look to pick up the stock as close as 52. This slight dip is ideal to prepare the name for a sustainable breakout. On the other hand, a breakout at 54 with a daily volume of at least 4 million should validate the move.

Initial target for the breakout is 64.

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For long term investors, there’s an opportunity to make a considerable profit. AKAM has been on a corrective phase since August of 2015 when it hit the top if the range at 77. However, technical indicators show that the correction has come to an end and the stock is ready to resume the uptrend. A move above 54 with heavy volume supports this assumption.

Should the breakout happen, long term investors can hold on to the name and see whether it can break the major resistance at 77. The move up will attract momentum investors and take the stock to 157. This is a great opportunity to earn serious profits.

This view is valid as long as support at 45 holds.  

Weekly AKAM Chart

Weekly Chart AKAM

Monthly AKAM Chart

Summary of Strategy

Buy: Breakout at 54 with volume or wait for stock to slide at 50 – 52

Support: 52 first, 50 next, and 45 last

Resistance: 64, 70, and 77

Targets: 64 and 157

Useless: Only when support at 45 is broken

APC – Andarko Pete Corp.

APC is another name that has rallied from a major support level. The stock has been on a downtrend since September of 2014, but it is looking to reverse its fortunes soon. A bounce at 40 shows that the support level is being defended. Now, the stock is looking to breach 51 to continue its move up.

To sustain its momentum, APC must stay above 51 with 9 million in volume. Maintain this level and we get to 62 first and 65 next. Long term investors can hold to the name and see if it can break major resistance 71. If it does, the next target is 94.

This view is negated if the stock breaks major support at 40.

Weekly APC Chart

Monthly APC Chart

Summary of Strategy

Buy: Breakout at 51 with volume

Support: 48, 45, and 40

Resistance: 62 first, 65 next, and 71 last

Targets: 62 and 94

Useless: Only when support at 40 is broken

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.6 stars on average, based on 149 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Trade Recommendation: EUR/RUB

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The Euro/Russian Ruble pair (EUR/RUB) supercharged its uptrend in December 2013 when it took out resistance of 45. The market had a strong base below 45 that it went parabolic after the breakout, catapulting the pair to as high as 97.907 in December 2014. In one year, the Euro grew by 54% against the Russian Ruble.

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At this price, the market was in extreme overbought territory. Trend followers and breakout traders took profits and drove the market down to 52.417 in April 2015. Bulls stepped in to bottom fish, which inspired a rally that helped lift the market to 93.69 in January 2016.

Sensing that a lower high was in place, market participants started to dump positions to limit their exposure and protect their capital. EUR/RUB plunged as it generated a series of lower highs until it bottomed out at 59.4435 in April 2017. The pair has been rallying since and it may be ready to start another bull run.

Technical analysis show that the Euro/Russian Ruble pair has broken out of a symmetrical triangle pattern on the monthly chart when it went above 75 on April 10, 2018. This comes after the pair generated a higher low of 59.4435 last year. In addition, the pair is far from overbought territory. While bears are working hard to regain control of the market, bulls have a lot of room to operate.

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The strategy is to buy on dips as close to 75 as possible. As long as bulls are above this level, they may have the momentum to take the pair to our initial target of 95.

The process may take less than a year.

Monthly Chart of EUR/RUB

As of this writing, the EUR/RUB pair is trading at 76.363.

Summary of Strategy

Buy: Buy on dips as close to 75 as possible.

Target: 95

Stop: 73

 

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.6 stars on average, based on 149 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Trade Recommendation: Hshare/Bitcoin

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The Hshare/Bitcoin (HSR/BTC) pair flashed signs of bullishness on December 18, 2017 when it took out resistance of 0.0012. The breakout attracted trend followers and momentum traders who helped push the market to as high as 0.002667 on December 31. In two weeks, the pair grew by over 122%. Those who bought the breakout started to take profits.

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With sellers dominating the market, HSR/BTC snapped the 0.00178 support on January 2, 2018. From that point, the market turned increasingly bearish as it posted a series of lower highs and lower lows until it bottomed out at 0.00616 on March 18. The pair has been rallying since and it looks ready to start a another bull run.

Technical analysis show that Hshare/Bitcoin is poised to take out resistance of 0.0012 and trigger the rounding bottom reversal pattern on the daily chart. To complete the breakout, the pair must print at least 1.2 million units of Hshare. Those who bought the bottom are likely to take profits at the resistance. The market needs buyers to offset the increased selling activity.

The strategy is to buy the breakout at 0.0012 after the required volume is met. If bulls take out the resistance, they may ignite a rally that takes the market to our target of 0.001780. Sell immediately because the market will most likely correct at that level before resuming its bull run.

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The process may take a month.

Daily Chart of HSR/BTC on Binance

As of this writing, the Hshare/Bitcoin pair is trading at 0.001118 on Binance.

Summary of Strategy

Buy: Breakout at 0.0012 with volume of 1.2 million units of Hshare.

Target: 0.00178

Stop: 0.001125 after the breakout.

 

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 (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.6 stars on average, based on 149 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Trade Recommendation: GBPUSD

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With the recent bearish action the Pound continues to show weakness. The major resistance at the Monthly Pivot Range has held but now we need confirmation to see if the price will hold at current lows as we are approaching a test of this level at the time of this writing.

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The action to take is to place a sell order to enter the market short if the market trades below the swing low of 1.3916. This will confirm the market wants to move lower. Place the stop loss and the profit targets stated below.

Entry Price: 1.3916

Stop Loss: 1.4010

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Profit Targets: First profit target 1.3810. Second profit target 1.3725. Once price reaches the first profit target lower the stop loss to breakeven. Then if the market follows through to lower levels manage the trade by trailing a stop loss 50 points behind until second profit target is reached or stopped out.

Disclaimer: The writer has no positions in the forex markets but does engage in short-term trading of forex and futures.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.9 stars on average, based on 49 rated postsI am the founder of VirtuesTrading.com, where traders can learn to use my Virtues Trading System. Formerly a Commodity Trading Advisor, I got my start in the Energy and Precious Metals Options & Futures pits of the New York Mercantile Exchange. I operate on the premise of efficient markets, the management of risk through the analyzation of price action and technical indicators. I have a BA in International Relations from the University of Southern California.




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