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Trade Recommendation: Intact Financial

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Technical Overview

  • Since double-bottoming in 2008 and 2009 at $26 (violet horizontal trendline in Figure 1), Intact Financial (IFC.TO) has enjoyed a four-fold increase. During the 2013, 2016 and 2018 corrections, the stock found support at a long-term trendline (support – green trendline; retests – green arrows).

Figure 1. IFC.TO Weekly Chart

  • Zooming in, after topping in November’17, IFC completed a H&S pattern (tops – yellow ellipses, neckline – yellow trendline in Figure 2).
  • In January, March, April, and May, all up-moves halted at a well-defined short-term resistance (red trendline). Yesterday (May 25), the stock managed to break and close above the resistance.
  • Today, the stock closed in positive territory, whereas the Financial sector (TTFS.TO) declined by over 0.5%.
  • The $95 level had served as support on multiple occasions in 2018 (purple horizontal trendline and arrows).

Figure 2. IFC.TO Daily Chart

Implications

  • The bounce off of the long-term support and the break above the short-term resistance are considered constructive.
  • The stock is expected to find support in the $95 – $96.50 range during pullbacks (i.e. at the red and purple trendlines).
  • The downward target from the H&S pattern was nearly met during the May decline (target – $92.25 – white vertical trendline in Figure 2, May 9 low – $92.65 – last purple arrow).

Outlook

  • Short-term bullish as long as the stock remains above $95
  • Long-term bullish as long as the stock remains above its long-term support (green trendline in Figure 1).

 Trade Recommendation

  • Buy the stock at current levels ($97.50 at EOD on May 24).
  • Target: Half at $101 (the January low which served as resistance in March – second red arrow). Other half at $108 (origin of the late 2017 decline).
  • Stop: Half upon a close below $95. Other half upon a close below the long-term support (currently at approximately $93.50).

Disclosure: No position yet but may initiate at any time. Will likely recommend the stock to my clients as a potential play within the financial sector.

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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4.5 stars on average, based on 15 rated postsPublished author of technical research. In his work on price “gaps”, published in the 2018 International Federation of Technical Analysts’ Annual Journal, he developed a new technical tool for analyzing and trading the “gap” phenomenon – the “K-Divergence” (http://ifta.org/public/files/journal/d_ifta_journal_18). Besides obtaining a Master in Financial Technical Analysis, he has completed a BBA and an MBA from the Schulich School of Business in Toronto and has completed all exams for the CFA, CMT and CFTe designations. Currently, providing research to investment management and financial advisory firms. http://www.linkedin.com/in/konstantindimov




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Trade Recommendation: Short SGD/JPY

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The Singapore Dollar/Japanese Yen Pair began to look bearish in December 2015 when it generated a lower high of 88.372. Things went from bad to worse when the pair broke support of 82.70 in February 2016. This triggered the large head and shoulders reversal pattern on the weekly chart.

The breakout ignited a selling frenzy that saw the pair drop to as low as 72.371 in June 2016. In about seven months, the Singapore Dollar lost over 18% of its value against the Japanese Yen.

At this price level, the target of the head and shoulders pattern was already achieved. SGD/JPY then went into base-building mode until November 2016 when volume and price surged. This ignited a rally that pushed the pair above 82.70 resistance in September 2017. However, it appears that the pair is not yet ready to start a bull run.

Technical analysis reveal that SGD/JPY is creating a head and shoulders reversal pattern on the weekly chart. This view comes after the pair generated a lower high of 83.014 in May 2018. The price action serves as a confirmation that the 82.70 resistance is still intact. More importantly, it trapped bulls who bought the breakout. Breach of 79.80 support should start a waterfall event that would drive the market down to our target.

The strategy is to short SGD/JPY when it breaks below 79.80. Once the market is below this level, participants will cut their losses which may send the pair to our target of 74.

The process may take three months.

Weekly Chart of Singapore Dollar/Japanese Yen on OANDA

As of this writing, the Singapore Dollar/Japanese Yen pair (SGD/JPY) is trading at 80.965 on OANDA.

Summary of Strategy

Buy: Short the market when it moves below 79.80.

Target: 74

Stop: Move above 81 after the breakout.

 

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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3.7 stars on average, based on 181 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: WAVES/Ethereum

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The WAVES/Ethereum (WAVES/ETH) pair appeared to have broken out of a cup and handle pattern on April 29, 2018 when it went as high as 0.01334997. Unfortunately for buyers at this level, the pair was not yet ready to start a bull run. Those who bought the bottom at 0.006 early this year used it as an opportunity to take heavy profits. As a result, the pair broke below 0.01 support on May 4.

The false breakout ignited a selling frenzy as those who bought the breakout raced to get out of the market. WAVES/ETH then broke support of 0.009 on May 5. The pair has been dropping ever since. However, the bottom appears to be in sight.

Technical analysis show that WAVES/ETH is about to hit support of 0.006. The support level is our target as a false breakout usually sends a market to a key support or resistance level. In this case, the bull trap above 0.01 is driving the pair down to 0.006 support.

Also, we can see that the RSI is about to hit oversold territory. We expect a selling relief once the pair flashes oversold readings which is around 0.006. This should provide an opportunity for bottom fishers to spark a rally.

Lastly, 0.006 is the pair’s last support level. We expect bulls to defend it to keep the market stable.

The strategy is to buy as close to 0.006 as possible. If bulls continue to preserve the support, the market will most likely bounce to our target of 0.009. We’ll revisit the trade once the target is hit.

The process may take a month.

Daily Chart of WAVES/ETH on Bittrex

As of this writing, the Waves/Ethereum pair is trading at 0.00609735 on Bittrex.

Summary of Strategy

Buy: As close to 0.006 as possible.

Target: 0.009

Stop: 0.0059

 

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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3.7 stars on average, based on 181 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: GBP/PLN

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The British Pound/Polish Zloty (GBP/PLN) pair started its downtrend in June 2016 when it took out support of 5.40. This triggered the rounding top reversal pattern on the weekly chart. The breakout ignited a selling frenzy and drove the pair to as low as 4.58032 in August 2017. In about a year, the British Pound lost over 18% of its value against the Polish Zloty.

At this price point, GBP/PLN was flashing reversal signals. First, a bullish divergence was seen on the weekly MACD. On top of that, the 4-day, 8-day, and 21-day moving averages were all detached from the weekly candle. This suggested that the market was due for a bounce.

GBP/PLN eventually came to life in September 2017 when it surged to as high as 4.94096. The market has been showing signs of strength since. This could be your chance to buy the breakout.

Technical analysis reveal that GBP/PLN is positioning to take our resistance of 5.00. This view comes after the pair posted above average volume since May 2018. This indicates a significant increase in demand, which is responsible for pushing prices up. In addition, the 4-day, 8-day, and 21-day moving averages are all trending up.

The strategy is to buy the breakout at 5.00. Once breakout is complete, the pair will likely consolidate above 5.00 before moving to our target of 5.40.

The process may take more than six months.

Weekly Chart of British Pound/Polish Zloty on OANDA

As of this writing, the British Pound/Polish Zloty pair (GBP/PLN) is trading at 4.91586 on OANDA.

Summary of Strategy

Buy: Buy breakout at 5.00.

Target: 5.40

Stop: Move below 4.94 after the breakout.

 

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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3.7 stars on average, based on 181 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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