Agree...Just to add my lengthy 2c worth...
The MA200 indicator is just one tool of many for long term investors. It's a lagging indicator and triggers a sell signal often well after a downtrend pattern is already established, so many investors see this tool as irrelevant...My yesterdays
chart shows the EMA200 (similar to MA200)recently being whipsawed, this is something that an less experienced TA disciplined long investors would hate and tempt that person to abandon the TA methodology...
However that person should see the MA200 for what it's purposes are and what it indicates..although the price/ma200 break is significant, its
the slope of the ma200 line which matters.
A rule of thumb and one which unfortunately media thinks its Gospel is when the ma200 slope turns downwards it signals that this price weakness is not a bull market correction event but a cyclic reversal to Bear cycle.
Notice on my
chart that the quicker and more sensitive EMA50 and EMA100 line slopes have developed a downtrend and for HNZ to get a downtrend ma200 slope more price decreases are needed....so HNZ not yet signaling a Bear cycle under the media's gospel.
Yes when the MA200 slopes downwards it could reflect a bear market cycle but when using any indicator there needs to be confirmations..
Other methods to confirm are:
1...a drop of >20%
2...The bull/bear support line is at 1.12 not marked on my chart.
3...many others
For the Optimists
My recent chart shows HNZ a pattern resembling a long term flagpole + the flag. Believe it or not this type of pattern is a bullish chart pattern..The pattern shows the irrational greed behaviour in the stampede to the top which quickly (fundamentally) overvalues the shareprice..This orderly downtrend result is investor rational reality being slightly more powerful than the irrational investors in denial and
this rationality will bring the market back to where Mr Market now thinks it should be...perhaps we are nearly there at this level with the bull/bear line in sight at 1.12 ..perhaps not....who knows??...
TAers always tell investors 2 basic things... TA can not predict the future with certainty and "
DO NOT rely on one indicator, or a single rule"...TA can be complex and incorporate many investor strategies, each with a set of tools, each with different entry and exit points when buying/selling shares. Because there are many TA strategy options there is often no right or wrong answer (TAers often at odds with each other) as those seemingly simple squiggly lines could just be a few tools in the toolbox of an very experienced TA investor using a very complex investment strategy.
However there are many much simpler/basic strategies which work reasonably well..The one I post on Sharetrader is a medium term "be patient and only act on confirming signals" strategy and is easy to understand and use.
For those investors that have patience weaknesses in their mental make up..my posted TA discipline would not be suited to them...Their better TA Strategy would be "Preemptive buy action at support areas" ...word of caution for those entering into HNZ now...preempting the market's future action is very risky....if using this risky strategy you must use the the "minimising risk" tools that comes with this disciplined strategy ... the most important of these tools is applying
automatic stop/loss set just below the bull/bear line or atm lines or any other method such as analysing depth tables used by nonTAers...Automatic is underlined because its a must for most people...do not rely on your own judgements unless your mental strengths include abiding to rigid disciplines and/or highly experienced very successful investor with extremely good/proven "gut feel".