One thing I'm finding really useful to learn from is people's feedback/interpretations of current charts. In the spirit of this, am having a stab.
Basically, I'm trying some different chart reading strategies, and any critical input on this take on things would be appreciated. I've removed the stock code from the chart, because I want to try this as a pure TA exercise. One note only is that the selling down on the 21st was due to a distressed major shareholder needing to dump a lot of shares due to a margin call.
Probably quite a few people know this stock, but please don't spoil the fun!
I'm only including a month's data, because anything before that is to an extent irrelevant for this stock due to a major share repricing. It hit what I read as a head and sholders in March and has been trending downward Mar-June from about .80 to .60 over that time. Then there was a trading halt, and then the data I'm giving.
Clearly this is a volatile, distressed stock - which is one reason I'm interested in paper trading it. So here are the charts.
Raw chart, candlesticks and volume only:
And with bollinger bands, MACD and fast stochastics:
Now I'm happy to say I read the almost perfect dumpling top on this between the doji on the 22nd (market indescision after the drop and when the circumstances were revealed to the ASX) and the gap down on the 31st, so I paper traded out at .29 after buying in at .26. That pattern to me was a clear bearish signal and has been borne out. I'm finding candlesticks and gaps to be pretty good in combo for reading some of these trends.
On the very tetchy information I've given, would people agree or disagree with the following (or perhaps there's just not enough info to tell based on the charts alone):
1. That this is going to need to demonstrably break resistance at .31 before it's terribly viable.
2. That it may have a possible support at around .25, albeit shaky, and if intraday data showed a white candlestick was going to be likely then it might be a faint buy signal - in a very cautious way.
3. That the risk/return on this stock isn't favorable at the moment (I would read possible return to .305, and possible risk at lord knows where if it breaks .25 downward)
4. That, given the quarterlies etc are out for this stock and that there is no further news on the horizon, it's likely to trade sideways for a while even if it returns to its support at .305
Out of interest also, what indicators would people favour to read a monthly chart like this? I'm finding the MACD pretty useless, but the MACD histogram useful. The narrowing of the Bollinger bands is interesting to me, as was the clear candlestick pattern - but any other indicators that would help (price envelope seems pretty poor) read this would be really interesting to hear. Also, any suggested modifications to the defaults on the indicators I've gone for here to get more granular data would be lovely!
Just throwing this out there: but a regular chart reading 'exercise' would be really useful for me to participate in - somewhere where I could have a stab at reading a chart, and also see how brighter minds than mine have read it. Is there a spot here somewhere that would be appropriate for that?
Thanks for wading through all that. Any random feedback also appreciated