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Analysis

These Stocks Have Bullish Chart Patterns

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The S&P 500 had its second weekly closing above the 2500 levels. However, it formed a doji candlestick pattern on the weekly chart last week, which shows that the bulls and bears are in equilibrium.

Key points

  1. Though the S&P is losing momentum, it remains in an uptrend
  2. Buy MOG.A
  3. Buy SMMF
  4. Buy MODN
  5. Buy PSTG

While the bulls have not been able to sustain the momentum above 2500, the bears have not been able to sink the index. As long as the index trades above 2480, it remains bullish and we can expect select individual stocks to outperform.

It is difficult to call a top in the market. Therefore, until the market breaks down, we shall look for stocks that are likely to continue their uptrend.

However, as the markets are due for a correction, traders should reduce their position size to less than 50% of normal. As the market moves higher, the stop losses should be trailed higher to lock in the paper profits, because the market can turnaround quickly from these levels.

MOG.A – Buy 83.63, SL 76, Target 100

Weekly chart

The stock has broken out to new lifetime highs with strength. We find a V-shaped recovery after the fall from the highs in October 2014. We believe that the stock has started a new uptrend and is likely to continue higher towards its first target objective of $100, though the pattern target is $120.

However, if the stock again falls below the breakout levels of $79, it will signal a failed breakout. Therefore, we shall keep a close stop loss to protect our position.

Daily chart

On the daily chart, we find that the stock is trading inside an ascending channel since February of last year. The stock has mostly traded close to the middle of the channel, barring two occasions.

Once, in November of last year, it attempted to breakout of the channel but failed. From there, it fell to the lower end of the channel by end-March of this year. The current leg of the up move is likely to carry the stock at least to the upper end of the channel, close to $90 levels, post which, it will either breakout of it or return to the middle of the channel and continue its uptrend.

As the stock is at lifetime highs, we shall buy it at the current levels and on any dips to $80. Our stop loss is $76, because we don’t want to hang on to the stock if it doesn’t sustain the new lifetime highs. Our profit objective is $100 and long-term objective is $120, as long as the stock sustains above the trendline support of the channel.

The risk on the trade is $7.63, whereas, the reward is $14, if the stock moves according to our expectations.

SMMF – Buy 25, SL 22, Target 30

Weekly chart

The stock is in an uptrend because it continues to make higher highs and higher lows. It made a high of $30.06 in December of last year, after which it corrected sharply. However, the correction ended around the $20 levels, post which the stock remained range bound. Last week, the stock broke out of the range with force. We expect a retest of the highs once again.

Daily chart

The daily chart shows the momentum behind the stock. It has quickly risen from $22 to $25 levels. It has a small resistance at $27, post which it is likely to retest the highs. Therefore, we shall buy the stock at the current levels and on dips to $24 levels. Our SL will be $22. The risk is $3, whereas, the reward possibility is $5.

MODN – Buy 14.5, SL 12, Target 18.5

Weekly chart

The stock had been range bound for the past four years. It has formed a nice base around the $7.5 to the $13 mark. Though the stock broke out of the range in May of this year, it could not rally higher. It remained stuck in a tight range for more than three months. However, last week, the stock broke out of the range, which should start a new uptrend in it. Our target objective is $18.5, which is equal to the depth of the range.

Daily chart

In end-May of last year, the stock had broken out of the range, however, it faced stiff resistance at the $14 levels, from where it turned down once again in early-August. From then to early-June of this year, the stock remained within the range.

This year, the stock broke out of the range in early-June, but could not gain momentum. It was stuck in a tight range for almost four months. However, on Thursday of last week, the stock broke out of the tight range and followed it up with further gains on Friday.

With the breakout above $14, the stock has started a new uptrend, which should carry it to $18.5 levels. Therefore, we can buy the stock at the current levels. Our bullishness will be invalidated if the stock falls below $12, which should be the stop loss. In this trade, the risk is $2.5, while the reward possibility is $4.

PSTG – Buy 15.65, SL 14, Target 20

Weekly chart

The stock has been range bound between $9.65 and $15.15 since 2016. Last week, the stock broke out and closed above the range. We, therefore, expect the stock to start a new uptrend and move towards its target objective of $20. However, if the stock again falls back into the range, it will signal a failed breakout and it will invalidate our bullishness.

Daily chart

The stock broke out of the range on Thursday, however, it could not sustain the gains and closed at $15.02 levels. Nevertheless, on Friday, the stock again broke out of the overhead resistance, which shows the buying support for the stock at lower levels. The stock has a minor resistance at the $18 levels, post which it is likely to rally towards its pattern target of $20. However, if the stock again falls below the range, it will become negative. Therefore, we shall keep our stop loss at $14 levels. In this trade, we risk $1.65 to earn a possible reward of $4.35.

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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4.7 stars on average, based on 9 rated postsRakesh Upadhyay is a Technical Analyst and Portfolio Consultant for The Summit Group. He has more than a decade of experience as a private trader. His philosophy is to use technical analysis for momentum trading and fundamental analysis for long-term positions. Rakesh likes to keep himself fit by lifting weights and considers himself to be a spiritual person.




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Analysis

Ethereum Takes Baby Steps to Recovery as Global Markets Surge 10%

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Following the first serious rebound from the last week’s carnage the global market gained 10% overnight, pushing back through the $200 billion barrier after a brief dip to $190 billion yesterday.

Ethereum Price Recovery

The rebound was not distributed equally, with many of the altcoins which had previously lost the most now benefiting in turn. Ethereum made a strong push in the last twenty-fours as it climbed from a near year-long low of $254.56 up to the current range in the $280’s, where it sits at the time of writing.

The 11% gains for the day sound good, but amount to relatively little in dollar value considering how much the coin lost in recent weeks. At one point during the night ETH climbed to a unit price of $290 – but that’s as far as it could go during this particular twenty-four stretch.

The sudden surge over the last twenty-four hours wasn’t enough to take Ethereum to the £300 mark, although that could be achieved following another 5% growth. The current $284 price per ETH is still one of the lowest witnessed in the last 11 months, so there’s still plenty of scope for investors to jump on board.

Predictably, USDT trades are the most popular today, making up close to 20% of the daily total as a significant portion of ETH becomes un-tethered. Wash-trades, or transaction mining on multiple exchanges once again comes close to equalling the actual recorded daily volume of $1.8 billion.

Global Surge Re-Rearranges Altcoins

While nothing could be termed normal in the crypto world, several coins have returned to their former market cap positions from before the dip. EOS is back in 5th place after temporarily being ousted by Stellar, and Cardano has returned to 8th spot after briefly giving up its place to Tether.

TRON and IOTA are still lingering outside the top ten, with Monero holding strong in the 10th spot previously occupied by TRON, and then IOTA in recent times.

Correlation and Causation

You’ve probably seen the Google Trend charts which show an alignment between ‘cryptocurrency’ Google searches, and the total cryptocurrency market cap. Right now the search volume is as low as it has been since before the surge of 2017 – but that isn’t necessarily an indicator of a lack of interest. It just means that people aren’t typing the word ‘cryptocurrency’ (or Bitcoin, which has an immensely larger search volume) into Google any more.

It says nothing about the number of people checking CoinMarketCap every day, and it doesn’t let you know how many people have suddenly become interested again after seeing prices drop to such long-time lows.

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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4.4 stars on average, based on 38 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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Analysis

Pre-Market: Selling Resumes as Dollar Extends Rally

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Global stocks are sharply lower today after the US open, as a bearish Asian session was followed by a lackluster European showing, and the major US indices also opened lower, erasing yesterday’s gains. Emerging markets are still to be blamed for the current selloff, even as the underlying cause is still the global tightening cycle and the Dollar’s rally.

S&P 500, 4-Hour Chart Analysis

The Chinese stock market and the Yuan led the way lower today, with the Shanghai Composite getting close to hitting new bear market lows, and with the currency hitting fresh 13-month lows. European stocks also continued their relatively weak streak, with the DAX trading at the lowest level since the end of June. The undoubtedly leading US benchmarks are all down by more than 1% today, but they are still close to their all-time highs, even as the divergences are just getting deeper and deeper.

Shanghai Composite, 4-Hour Chart Analysis

The Turkish Lira is still in the center of attention, as the battered currency added to yesterday’s gains after the Turkish central bank intervened in the interbank markets. The bank made it harder to short the Lira, which in effect also make it harder to hedge against the decline of the currency, so basically the country started on the road of capital controls.

USD/TRY, Daily Chart Analysis

While preventing a run on the currency is a legitimate goal, by not changing its confrontative stance and not taking steps to clam the market, the risk of a massive capital flight is still very high. The broad rally in the Dollar is just making matters worse for the country, and contagion is far from being dodged by global markets at this point.

With several European markets being closed the large pre-market moves are not a surprise, even as the key economic indicators leaned bullish before the bell. The most awaited US retail sales report was a sizeable beat in both the headline, and the more reliable core figure, although the previous numbers were revised lower. The Empire State Index was also well above the consensus estimate, but US industrial Production missed, similarly to yesterday’s Chinese and European indicators in the segment.

Dollar Break-Out Continues

EUR/USD, 4-Hour Chart Analysis

The US Dollar’s surge is arguably the most important trend globally, and the reserve currency confirmed its break-out to new 13-month highs today, as the EUR/USD pair hit 1.13, the GBP/USD pair trading with a 1.26 handle for the first time in a year, and with commodities suffering heavy losses again.

Copper Futures, 4-Hour Chart Analysis

We have been following copper’s struggle to stay above the key support zone near $2.7, and today’s Asian weakness sealed the faith of the commodity for a while as Dr. Copper hit a new 14-month low itself, signaling that more trouble is ahead for China and the commodity-complex.

Gold is also at levels not seen since early 2017, and crude oil gave up its recent bounce falling to an 8-week low, getting close to $65 per barrel with regards to the WTI contract.

Featured image from 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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4.6 stars on average, based on 318 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Crypto Update: Lisk’s Bearishness Hides True Trend

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Many avid cryptocurrency traders have taken Lisk off of their watchlist (LSK/BTC) and for good reason. The pair has plummeted like a shooting star crashing down the surface of the planet. From the high of 0.003398 on February 10, 2018, LSK/BTC is down below 0.00043 today. The pair’s fall wiped out almost 90% of its value.

Nevertheless, long-term investors shouldn’t be worried. As bearish as Lisk looks, we are convinced that it is not yet ready to go the way of the dinosaurs. On the contrary, LSK/BTC is flashing signals that it is about to come back to life soon. If it does, it will confirm our assumption that Lisk is currently range trading.

Lisk is Locked in a Wide Trading Range   

If you’re an experienced technical analyst, then one of the things that you probably do is map out key areas of support and resistance. This helps you determine the overall trend of the market. It is then easy to come up with a strategy once you establish the trend.

We performed these steps in our analysis of Lisk and the charts showed us that the pair is range trading when looking at it from a long-term perspective.

Weekly chart of LSK/BTC

LSK/BTC is locked in a wide trading range. The bottom of the range is support of 0.0004, the middle is 0.0016, and the top end is 0.0032. The market has been trading within this range since May 2017.

The “smart money” investors buy the bottom of the range. You can see this as volume spikes whenever the pair drops to this level. This tells us that they accumulated enough positions to influence market movement. As soon as they are ready, they spark a rally and constrict supply to inflate market price. Then, they wait for the top to start distributing positions.  

Volume differences in the daily chart of LSK/BTC

The “smart money” investors are very likely to repeat the process once LSK/BTC hits the bottom end of the range. We see that process developing right now.

Breakout from a Falling Wedge

Lisk is fond of falling wedges. Between June and December 2017, the pair broke out from three falling wedges as it range traded between 0.0004 and 0.0016. This appears to be the pattern used by “smart money” investors to distribute positions and keep prices from climbing further.

Fast-forward to today and we see that LSK/BTC has created another falling wedge on the daily chart.   

Daily chart of LSK/BTC

What’s interesting is that the apex of the falling wedges always formed around the bottom end of the range at 0.0004. This usually sets up the market for a bounce and a breakout that sends the pair to the midpoint of the range.

We believe that the market is repeating the same process today. LSK/BTC is in extreme oversold territory on the daily RSI. On top of that, the stochastics are respecting support of 3.08. This support has never been breached. The market may linger on this level but it always bounces. This tells us LSK/BTC can only get stronger from this point.

Bottom Line

LSK/BTC may have lost over 90% of its value from the high of 0.003398, making the market look ultra bearish to many investors. However, technical analysis from a long-term perspective show that the pair is currently range trading. Breakout from the current falling wedge should confirm this assumption.

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 223 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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