April 12, 2010

Trading Analysis Candlestick indecision Point on AMAT

Noticed a classic turnpoint indicator in AMAT chart. This is an exit point I passed up on because my profit target was $15.00. True to the the pyschology of trading, I have been beating myself up for missing this exit for a few months. Finally learnt enough to figure out what I should has seen. .Isn't hindsight great!

If I'd been watching more closely, I would have seen the  t (doji) in the chart between 1/7 and 1/14, with a high of $14.94, just short of my profit target.  These typically show market indecision -buyers and sellers trying to figure out what to do next. First indicator I ignored.

The third graph is 7-Day Relative Strength Indicator (RSI). When it hits about the 80 line (dark line), thats time to sell. Second indicator I ignored.

The third and biggest indicator I ignored was the big red candle crossing right through the 13-Day EMA indicated that this rally had really run out of momentum. I should have settled for  modest 6% four month profit enough at that point.

When the red candle intersects the 50d EMA on 1/23, the rally turned into a short sell opportunity. You can see the volume climbs on the volumne/MACD graph as the short sellers take advantage of this situation, and everyone elses stop losses and trailing stops get triggered. (the market in general had a lot to do with this as well).

A lot of technical analysis lessons in a small graph.  Profit targets are great, but use technical analysis and trailing stops to get out before a rally collapses.

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