This post is going to be about Technical Analysis.
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| Technical Analysis |
Why should we see the chart? A chart should not be too complicated. For me, the most precious information from the chart will be the Volume and Price Action Analysis. [1]
Price Action is the most important as the delta/difference is the one determines whether we are earning or losing. The Price Action needs to be supported or validated by the Volume.
Volume reveals activity. Volume reveals the truth behind the Price Action. Volume validates Price.
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With the Volume and Price Action, we can combine with some technical indicators, such as:
i) Bollinger Band
ii) Simple Moving Average
iii) MACD
iv) RSI
v) Support and Resistances.
If we combine all these, i believe the skill is enough for us in our investing journey. Of course, there are also a lot of candlesticks and patterns. Today, i saw a few good counters released their QR and the chart had broken their resistances. I am going to share an OLD story. Still remember Julius Caesar's famous quote? "I came, I see, I conquer". Same goes to our TA, "I Came, I Test, I Conquer with VOLUME!!!"
My OLD story today refers to:
OLDTOWN
OLDTOWN
LIIHEN
DSONIC
And i will review it with the Volume and Price Action Analysis.
1. OLDTOWN
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| OLDTOWN Daily Chart |
OLDTOWN had been testing the resistance of 2.01 for 4 times. 2 times had successfully breakthrough, but the strength is not enough, which resulted in a fall after less than 5 days. OLDTOWN released a good Q3 result. Its revenue grew +13% yoy and +16% qoq respectively, while net profit grew +82% yoy and +94% qoq respectively. Notice there is a gap in the end of November. The gap is due to below expectation of the Q2 result. Now the gap had been filled with a good Q3 result. Once the gap is filled, it will act as a resistance. Notice todays high volume? I am quite sure that, the resistance of 2.01 will be a strong support due to, the price breakout with a strong volume supported by the fundamental satisfactory QR.
SMA20 had crossed over SMA40, indicating a mid term bullish. RSI and Bollinger Band shown some trace of overbought. All in all, today, OLDTOWN shows a firm and strong resistance breakout with satisfactory volume. Hope OLDTOWN can continue to maintain its performance and its business in Cafe Chain Operation and manufacturing of Beverages.
OLDTOWN came, OLDTOWN test 2.01, OLDTOWN Conquer with VOLUME!!!
2. LIIHEN
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| LIIHEN Daily Chart |
LIIHEN had been one of my favourite stock since January 2016. Since then, i had written 3 posts about LIIHEN and it had transformed to a dividend stock from a growth stock.
LIIHEN had a strong resistances at 3.28 which had been tested 4 times previously. Recently LIIHEN had successfully breakout the resistance of 3.28 with volume. Actually, i will prefer the volume to be 50% of the first testing. LIIHEN also announced a good result. Its revenue grew +11% yoy and +16% qoq respectively, while net profit grew +12% yoy and +27% qoq respectively. LIIHEN is forming an ascending triangle and it breakout 3.28 with volume. Take note of the RSI and also BB, both the indicators shown overbought signal. SMA20 recently had crossed SMA40, which signals a mid term bull for LIIHEN.
LIIHEN came, LIIHEN test 3.28, LIIHEN Conquer with VOLUME!!!
3. DSONIC
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| DSONIC Daily Chart |
For DSONIC, 1.23 had been a support for around 1 year. Recently 1.23 had been breached and the next support level is 1.13. Today, DSONIC's volume had been fantastic with 15.44 million, in which i think the volume is enough to break the resistance of 1.23 and to further test the next resistance at 1.3. The RRR (Risk to Reward Ratio) is very ideal at the moment. Cut loss when the chart closes below 1.13, and it had the potential to challenge the previous high of 1.61. So, imagine we bought in at 1.21,therefore the risk will be 0.08; as for the reward, we aim is to break the previous high of 1.61, the rewards is 0.40.
The risk to reward ratio is 1 Risk : 5 Rewards. In this bull market now, i think DSONIC can break 1.61 in another 6 months time. However, DSONIC had not released their Q3 2017 result. If we are not confident of the result, therefore, we should wait. Our strategy is, as long as the RRR is 1:3, then we should be operating in a safe mode.
DSONIC fell, DSONIC climb 1.23, DSONIC Going to Conquer with VOLUME!!!
Summary:
Volume and Price Action Analysis must be aligned to tell the whole story. In the example, my OLD story further verifies the importance of Volume and Price Action Analysis. The price action tells a story, the volume completes the story. The TA (Technical Analysis) skills must be used together with FA (Fundamental Analysis) . And if we know the PA (Projection Analysis) or the theme, we can be able to ride the wind smoothly~
That's the end of my OLD story. Hope you enjoy it~
If you are eager to learn more about stock investing techniques,
i will be conducting an investing course on both FA and TA in KL.
Please pm my FB Page or whatsapp me (016-246 7867) if you are interested and determined, no matter you are a new or experienced investor. I am sure the course will benefits you!
Learning never waits, it starts NOW... I am confident that i can help you~
“An Investment in Knowledge Pays the Best Interest” Benjamin Franklin
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Let's Ride the Wind and Gainvest
Gainvestor 10sai
23 February 2017
12.30am
Sources:
[1]: Source: Coulling A. (2013). A Complete Guide to Volume Price Analysis.
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