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RE: Stage Analysis Beginners Questions - Haugaard - 2020-04-27
I'm in partial agreement with Isa. I agree that it's too thinly traded for proper risk management. I also agree that the price action is generally what you should be looking for. However, i do not believe that, in terms of method, this would've made a good buy. As you can see on the attached chart, the volume of which you are referring to, all comes from consolidation or from the pullback itself. The volume on the breakout was lower than average, and is therefore, not fulfilling the requirements. High volume is great on the breakout, but high volume on the pullback is bearish.
All the best,
@marcushaugaard
RE: Stage Analysis Beginners Questions- CTC.TO - Haugaard - 2020-04-27
(2020-04-26, 10:49 PM)isatrader Wrote: I've added the ichimoku cloud to the weekly chart, as this gives a rough visual guide to where the resistance is and considers the time based nature of resistance too, as it projects the cloud six months into the future. So I find this useful if I'm ever unsure about resistance. As ideally you want to trade from a proper base once it's clear of resistance.
Hi Isa,
Could you elaborate on the use of the Ichimoku cloud and the thinking behind it? I think that it declines rather quickly. Take this stock as an example. I bought it on a breakout from a double bottom back in November 2019. I think it was a mistake, because in theory, there was resistance all the way back up. The decline wasn´t older than 2 years, and with that in mind, filled with viable resistances. The Ichimoku cloud is telling a different tale. But yeah, could you elaborate on how you approach it, and to which degree you would trust it?
RE: Stage Analysis Beginners Questions- CTC.TO - isatrader - 2020-04-27
(2020-04-27, 02:24 PM)Haugaard Wrote: Could you elaborate on the use of the Ichimoku cloud and the thinking behind it? I think that it declines rather quickly. Take this stock as an example. I bought it on a breakout from a double bottom back in November 2019. I think it was a mistake, because in theory, there was resistance all the way back up. The decline wasn´t older than 2 years, and with that in mind, filled with viable resistances. The Ichimoku cloud is telling a different tale. But yeah, could you elaborate on how you approach it, and to which degree you would trust it?
When you bought in November the cloud resistance was only up to 136.6 by my readings, and both the top and bottom of the cloud was flattening and thinning. The cloud above that from previous weeks no longer matters. So I think you are misinterpreting how the cloud resistance works, as it moves with time.
I find it very useful when quickly scanning weekly charts if I want to see the strength of the resistance, as sometimes stocks might be breaking out into Stage 2A but only from a smallish base, which in a lot of cases is often fine if it had a Stage 4 decline before that was only short. But if a stock has had a longer decline, then the resistance will be stronger, and the cloud gives a quick way to show where it is.
Over time resistance weakens, and this shown by the thinning of the cloud, and when the price begins to close above it, the previous resistance changes to support.
Here's a good starting point for understanding it better https://school.stockcharts.com/doku.php?id=technical_indicators:ichimoku_cloud
P.S. the mistake with this stock wasn't the resistance. It was the lack of volume on and following the Stage 2A breakout, which was only average. Breakouts at the Stage 2A point that don't have a significant volume increase often go on to form higher secondary bases for six months or more. So you get in a stock that goes sideways for many months, and hence your money is tied up. This is the opportunity cost that Stan talks about in the book that is so important.
RE: Stage Analysis Beginners Questions - Mashed - 2020-04-27
Hello
What do you think about that breakout? I dont see any Stage 1, so should be weaker than if a Stage 1 was form, right?
I dont know if you are interested in fundamentals ( i think not haha), but a friend follows the #Rule1, Phil Town's book, and told me that Fevertree meets the requirements.
RE: Stage Analysis Beginners Questions - isatrader - 2020-04-27
(2020-04-27, 04:54 PM)Mashed Wrote: What do you think about that breakout? I dont see any Stage 1, so should be weaker than if a Stage 1 was form, right?
I dont know if you are interested in fundamentals ( i think not haha), but a friend follows the #Rule1, Phil Town's book, and told me that Fevertree meets the requirements.
It's only just moving into Stage 1A, and it is well below resistance. See the replies to marry123 over the last few pages as to why this is not what we look for in the method.
RE: Stage Analysis Beginners Questions - Mashed - 2020-04-27
Thanks a lot. I should print out the replay you said. Is wonderfull.
I am sorry for my chart, i didnt read the 123 page because i though i did it 2 or 3 days ago but I see now that is new.
PD: When I read the book I always think "Wow, this method is very simple and intuitive!" But the reality is very different haha
RE: Stage Analysis Beginners Questions - isatrader - 2020-04-27
(2020-04-27, 05:21 PM)Mashed Wrote: Thanks a lot. I should print out the replay you said. Is wonderfull.
I am sorry for my chart, i didnt read the 123 page because i though i did it 2 or 3 days ago but I see now that is new.
PD: When I read the book I always think "Wow, this method is very simple and intuitive!" But the reality is very different haha.
It can be very simple once you get used to it. But it takes time and practice, and learning from your mistakes. Focus on your risk first, and everything else will get a lot easier.
RE: Stage Analysis Beginners Questions - Mashed - 2020-04-27
I have seen in other thread Netflix is consolidating a bull flag pattern. I would like to compare to a similar spot: Wallmart
Weekly chart: Better to choose Netflix because comes a larger stage 3? Or here in stage 3 is not necessary to look that?
Nice volumen in both.
Daily chart: Volume much better in netflix because grow up during the breakout. In Wallmart is during the coronavirus crash, and after the volume decrease.
2 Hours: Again we can see the volumen is better in Netflix.
So, if I am not wrong, volume is clear. But with same volumen, is better a larger stage 3?
Thanks again
PD Make sense for you compare similar graphic to see the differences?