# Technical Analysis 101



## sammy84 (7 October 2009)

Thought it would be a good idea to start a thread where the chartists on this thread analyze a stock with each of their different methods. A good chart to start with is IDL.




I've had this chart on my watch list since July, looking for a congestion pattern to form so I could buy. Unfortunately the congestion pattern has gone on for too long now, where now it might be taking the character of a topping pattern. Its movement since September perplexes me, it rallied hard and now has been pretty much unresponsive to the broader market movements. Support of 42c was broken yesterday (only by a little) and buying came straight in. My VSA system showed a buy today, however I'm still not convinced. My analysis nonetheless is that given the support shown in yesterdays dip prices shouldn't go lower, I would enter a buy on the break of the rectangle. 
 I would enter a buy on the break of the rectangle at 45c and a stop at 41c.

Hopefully some discussion gets going and we can all learn a thing or two


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## skc (7 October 2009)

sammy84 said:


> Thought it would be a good idea to start a thread where the chartists on this thread analyze a stock with each of their different methods. A good chart to start with is IDL.
> 
> View attachment 33799
> 
> ...




One great advantage of technical analysis is that you can go through hundreds of charts in a short time, and see what patterns jump out at you, rather than forcing a pattern in mind to a chart. This IDL chart doesn't jump at me. The fact that it's been on the watchlist for some time doesn't warrant action IMHO.  

Other than that I agree with your analysis, and that's how I would trade it if I must trade it.


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## Boggo (7 October 2009)

There you go, two different systems and two different outcomes on the same day.

Its about what your system (charting) behaves like in different situations and on different stock patterns/behaviour.
As an example, the bottom chart procedure cannot be used on a daily chart of BHP.


(click to expand)


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## Garpal Gumnut (8 October 2009)

Price and volume.

Supply and demand.

Pure and simple.

gg


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## tech/a (8 October 2009)

Garpal Gumnut said:


> Price and volume.
> 
> Supply and demand.
> 
> ...




So how then would you *apply* the above to trading this stock?
Long/Short/Neutral?

This is a general comment I'm sure.

But many cant even A*PPLY* that!


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## adt100 (8 October 2009)

Personally like the volume characteristics. Large drop off in the recent consolidation. However looking back resting below major area of resistence (although quite some time ago). Would like to see what effect a large volume day had before commititng. Money on move to the upside at the moment but really a 50/50 call (arent they all?). Would prob look for 1/3 position to upside adding on a break of .50 if had to trade today. Preference to stand aside a little longer


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## swm79 (8 October 2009)

i'm no technical expert but i'm gonna take a stab - to me that has some of the characteristics of a very small decending triangle... 

also, its testing parabolic sars buy signal today but with MACD passing through 0 i'd leave that for someone else.


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## lukeaye (8 October 2009)

Hi there,

Look i personally would have liked to have seen a deeper correction, as is shown in the previous run up.

I am a fan of trading off support in that sort of confluence situation, but all things considered, i would probably opt for a break of the box first, an actual weekly close before entering, becuase i think the chances of a further pull back are quite real.

One thing going for it is low volume towards the end of the correction.


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## beerwm (8 October 2009)

I wouldn't of considered the break of the 42c support level as 'significant' -

- looking at the intraday data, it was a a high volume spike that lasted a few minutes.

if I were to trade it off support,

Buy order @ 42c
Stop Loss @ 41c

reduce position-size,  as it's a higher risk trade.

maybe then, 

TakeProfit 50% @ 45c [ 3R... 50% = 1.5R ]
let the other 50% run.


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## brty (8 October 2009)

For my money this is a barge pole stock. It could break either way 20% in the blink of an eye. 

The correction has lasted too long, both support and resistance  tested a number of times.

Any purchase or sale with a close stop is asking to be hit.

Move along, next....

One of the secrets of trading is knowing what to leave alone.

brty


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## sammy84 (8 October 2009)

skc said:


> One great advantage of technical analysis is that you can go through hundreds of charts in a short time, and see what patterns jump out at you, rather than forcing a pattern in mind to a chart. This IDL chart doesn't jump at me. The fact that it's been on the watchlist for some time doesn't warrant action IMHO.




I agree. This is not a pattern I would normally look to trade, however I thought it would be suitable for conversation given that it had declining volume, strong resistance and support, a congestion pattern and price action prior, so that hopefully it would fit into a lot of peoples system. I do like to keep charts such as these on my watch list as I find them an educational tool.

One interesting thing to note is that besides Boggo's second system no one would go short. If we were to put this chart on the XAO analysis thread and call it the XAO there would be numerous people people calling a top for the sake of trying trade against the trend. Just goes that most of the money is made trading with the trend. Nonetheless if there was weakness appearing in the broader market, would anyone go short at a break of the lower box?


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## Bowlane (9 October 2009)

In trying to interpret the chart of IDL, don't ignore the fact that it currently has a spp at a max of 42c closing 9 Oct.
DYOR


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## Tukker (9 October 2009)

Too much risk attached to this formation. Looking at the declining volume and lower prices, plus the recent run i would fathom that one bit of bad news anywhere in the market would send this down.  So yea, short it if you can, but i don't think this would be on my derivatives list.


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## sammy84 (19 October 2009)

That mini holding pattern has been broken and now we are starting to get some price movement. Todays volume is decisive, looks like a good deal of buying entered on what was a down market day. There still is the worry of selling into resistance however. Nonetheless, if you bought on the break of .45, you would be looking good right now.

Anyone else have differing thoughts?


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## johnnyg (19 October 2009)

Did you take a position Sammy?


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## sammy84 (19 October 2009)

johnnyg said:


> Did you take a position Sammy?




Hey Mate

Unfortunately this sort of pattern didn't fit within my trading rules..maybe I need to change my rules


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## johnnyg (19 October 2009)

No worries, I was just curious to see if the discussion after your original post changed _your_ view of the stock.


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## Boggo (19 October 2009)

Update of my two previous charts on IDL. I don't hold.

(click to expand)


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## Mr J (20 October 2009)

sammy84 said:


> Just goes that most of the money is made trading with the trend.




I wouldn't be so sure about that. I expect at least as much losing money tries to trade trends as pick tops and bottoms. There is a lot of money to be made on reversals. The problem isn't trends, tops or bottoms, it's poor trading.


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## sammy84 (20 October 2009)

Up 6.35% today on strong volume, things are looking very good. Has created a gap however that may want to fill itself. Would have been nice to hold. Did any one buy?


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