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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.

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.

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 249 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: Ripple

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The Ripple/Bitcoin (XRP/BTC) pair took out resistance of 0.00004648 on September 18, 2018. This triggered the breakout from the large falling wedge on the daily chart. The breakout attracted momentum traders and trend followers. This enabled the pair to rally to as high as 0.0001175 on September 21.

At that price level, the market was in extreme overbought territory. This signal compelled many of those who bought the breakout and the bottom to lock in gains. The heavy selling pushed the pair to as low as 0.00006077 on October 11. The pullback sent the market tumbling by over 48% from the top of the rally.

If you’re a retail investor, this would have probably instilled in you a lot of fear, uncertainty, and doubt. The reality, however, is that XRP/BTC was just consolidating to prepare for another push. It looks like it is ready to make that move soon.

Technical analysis shows that XRP/BTC has broken out of the bullish pennant continuation pattern. This breakout marks the end of the market’s consolidation. Technical indicators seem to be affirming this view.

First, we have the daily RSI cooling off from overbought signals. More importantly, it is bouncing off the trendline support. This gives bulls a lot of room to rally before the market gets overheated. Also, volume has steadily decreased during this consolidation period. However, it has significantly increased in the last few days. This indicates a renewed interest in XRP/BTC.

The strategy is to buy the breakout as close to 0.000066 as possible. As long as the market is above this level, it has the momentum to climb to our target of 0.00012.

The process may take more than a month.

Daily Chart of Ripple/Bitcoin on Binance

As of this writing, the Ripple/Bitcoin pair is trading at 0.0000693 on Binance.

Summary of Strategy

Buy: As close to 0.000066 as possible.

Target: 0.00012

Stop: 0.000063

 

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 249 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: Ripple/Ethereum

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The Ripple/Ethereum (XRP/ETH) pair took out resistance of 0.0015 on September 18, 2018. This triggered the breakout from a large double bottom structure on the daily chart. The price movement attracted breakout traders and trend followers. This enabled the pair to climb to as high as 0.0034179 on September 21.

While we did miss the breakout, there was no reason to chase the breakout rally. After all, breakout rallies always fade. This is something that we’ve seen over the last few weeks in the crypto market. The key is to wait for the market to consolidate and show us a continuation pattern. We’re seeing that now in Ripple/Ethereum.

Technical analysis shows that XRP/ETH is creating a bullish flag on the daily chart. Looking at this pattern, we can see that the pair is consolidating between 0.0020 – 0.0025. With the range established, we can start accumulating positions at the support.

In addition, the consolidation has allowed technical indicators to cool off. XRP/ETH is now out of extreme overbought territory on the daily chart. Also, volume has significantly declined. This is a characteristic of a bullish pullback. The decline in volume can be attributed to sellers losing ammunition over time.

The strategy is to buy as close to 0.0020 as possible. As long as the market is above this level, it has the momentum to climb to our target of 0.0035.

The process may take more than a month.

Daily Chart of Ripple/Ethereum on Binance

As of this writing, the Ripple/Ethereum pair is trading at 0.00213541 on Binance.

Summary of Strategy

Buy: As close to 0.0020 as possible.

Target: 0.0035

Stop: 0.0019

 

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 249 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: TRON

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The TRON/Bitcoin (TRX/BTC) dropped to as low as 0.00000259 on August 16, 2018. At that price level, the market was down by over 87% from the 2018 peak of 0.00002047. Fortunately for TRX/BTC, 0.0000026 is a buy zone. Bulls used this level back in December 2017 as a staging ground to launch its parabolic run. Now, we’re seeing bulls use it to reverse the market’s trend.

Technical analysis shows that TRX/BTC took out resistance of 0.00000375 on October 7, 2018. This triggered the breakout from an inverse head and shoulders pattern on the daily chart. The breakout looked convincing as well. On October 7, the market printed volume that’s over 156% of its daily average. The price action attracted breakout traders who helped push the pair to 0.00000429 on October 9.

The rally, however, was seen as an opportunity by those who bought the bottom to take profits. As a result, TRX/BTC dropped to 0.00000333 on October 11. This price movement may be concerning because the pair went below the breakout level. The good news is the 30-day moving average came to the rescue as it acted as a reliable support. Bulls relied on it to lift the market above the breakout.

In addition, the daily RSI appears to be already in an uptrend. It has been generating a series of higher highs and higher lows indicating that bulls are gaining significant strength.

The strategy is to buy the breakout as close to 0.00000375 as possible. As long as the market is above this level, it will attract more breakout traders and bargain hunters. They will help push TRX/BTC to our target of 0.0000048.

The process may take a month.

Daily Chart of TRON/Bitcoin on Binance

As of this writing, the TRON/Bitcoin pair is trading at 0.00000386 on Binance.

Summary of Strategy

Buy: The breakout as close as 0.00000375 as possible.

Target: 0.0000048

Stop: 0.0000035

 

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 249 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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