Hey all, I was asking a few questions about getting started in T/A on another thread. Hopefully this can be a place where those new to T/A can post their charts and ask the pros for feedback/advice.
I'm new to T/A so I thought I'd start out by trying a chart on NEN! I had already shared my chart with others and had a discussion going here: http://www.aussiestockforums.com/for...632#post653632 but I decided to move the chatter here. Continuing the talk:
Thanks a lot for your contribution Chelea. A few quick clarifications if I may. I'm not quite sure what you meant by "SP needs to close below 31c to call it a double top, ". Where/when did this sub-31c close need to occur?Originally Posted by Chalea
Check the weekly if the daily confuses
SP needs to close below 31c to call it a double top, (target approx 15c).
For now, the uptrend's over & longer term indicators have signalled & now confirmed a change in momentum direction, (confirming the trendline break).
Regarding the above, I had a read of this rather comprehensive guide on what they entail and how to identify them: http://stockcharts.com/school/doku.p...e_top_reversal
After reading that, I doubt that the two highs we saw in early May and early July can be part of the 'double top' pattern - the two tops are not very similar (they are a good 9% apart). Also, the decline from the second peak wasn't on expanding volume like the above guide requires.. and of course, the neckline of this possible double top was indeed tested after the 'second peak' (early Aug) but the support held and there was a substantial rebound. I don't think we have a double top reversal on our hands...? What do you think? Is my reasoning here correct?
Also, regarding your comment about the bearish divergence between price and RSI, could you please clarify? You've said that if the RSI gets lower as new highs are formed, then it's a bearish signal. My (rather elemental) understanding of RSI is that it indicates how overbought or oversold a security is. It thus seems logical to conclude that if new highs correspond to LOWER RSI's, then it means that even though new highs are being formed, the lower RSI's are saying that the stock isn't being overbought, despite the new highs (doesn't that make it bullish?) If the RSI was getting HIGHER as the price got higher, that would seem bearish to me as the new highs are corresponding to the RSI displaying an overbought signal (that is, the new highs are a result of being overbought, suggesting a reversal) I'm really sorry for the jumble, I hope what I just wrote is intelligible =).
Thanks a lot guys!