Using TA to time entries and exits

[Baa_Baa]

@Hoop, nice IQE chart, like the legend Phaedrus did. Put it on the IQE thread

[Hoop]

AIR on Tuesday 26th April broke all sorts of TA indicators and chart patterns and triggered mass sell signals when it fell below $2.80..To a TA investor mass sell signals are serious..the discipline screams out "SELL" and yet wednesday thursday friday we witnessed ST posters buying in like crazy especially when the market opened...they have mistimed their buys because they failed to observe one very basic share investing rule Don't buy during a down trend..and..two..not understanding the present trading behaviour happening with AIR
Charting and TA indicators are graphic images of present and past trading behaviours....often charts show different images all layered together...I have been posting chart price boundary patterns such as rectangle pattern (trading range) and supports and resistances and so at times I was more favourable towards AIR depending where the price was ...e.g more bullish at lower end boundary supports and more bearish around resistances of higher end boundaries...I did not mention the slowly forming Head & shoulder pattern as it was not at that stage a concern and the charts I posted where cluttered enough..Actually, in theory a chartist doesn't action a H&S pattern until the breakout occurs..
I posted that technical damage had occurred (in other words very high risk to buy now) but got knock down in flames by the verbal few..Their actions of filling up the AIR thread with rosy FA and forward FA verbal pollution resulted in an excellent post by Xerof being totally swamped and missed

Classic.

A nice head and shoulders (bearish) has completed. An eyeball measured target looks to be around 2.15, but there will be support at that old resistance at 2.25 imo.

dyor on h&s

Ok below is a AIR chart stripped of all its TA layers except for the H&S Pattern...It is a great textbook example of a chart pattern which is the most reliable of all chart patterns..once the H&S pattern is completed (when the breakout occurs) there is a 96% chance the shareprice will fall more than 5%.. yet when the technical damage occurred (I posted the warning) I saw the inexperienced posters swayed by the verbal few into buying...buying on the 26th and 27th and 28th almost guaranteed their buys as being mistimed
Some of these influenced people never saw it happening and even now are total confused as to why AIR trading behaviour happens like this

I'm still baffled by this.

QAN although has taken a tumble is trading at a 2016 P/E just below 6, S&P 500 airlines index trade at a forward P/E of around 7.5.... AIR is trading at a P/E of around 4.5...

Sure, QAN has signaled softened demand & oil prices have risen... but relative to prior years, tourism is high & oil is still relatively cheap.

Is it just the market's expectation of these macro economic drivers to continue to get worse? Or is there something else driving this?

My apologies if these all seem blatantly obvious, still getting my head around airline stocks! The sell off just seems overdone IMO on the face of it all.

...Seeing these people influenced made me feel sick...and emotionally drained..I had to have a few days off ST..

Xerof has a target price of 2.15 I guess those calculations where using highs/lows..My chart calculations is using closing day prices...there's no right or wrong here as the target price.

Of more complexity when other patterns and TA incators are added in as chart layers we can see possible supports on the way down towards 2.19 target price which would affect the 46% odds of the theoretical happening...But I will leave the more complex stuff to another day

[Baa_Baa]

@Hoop @Xerof .. I can see the H&S but can't correlate the suggested target to any other price supports. What does stand out is the 4-year rising support trend line which converges around $2.35 with the Jun/Sep15 lows horizontal support. This weekly chart illustrates.
Attachment 8009

[Hoop]

@Hoop @Xerof .. I can see the H&S but can't correlate the suggested target to any other price supports. What does stand out is the 4-year rising support trend line which converges around $2.35 with the Jun/Sep15 lows horizontal support. This weekly chart illustrates.
Attachment 8009

The target price is a line drawn in the sand, it is not a support line..it is not act as a S&R line so the shareprice should not be affected unless of course if everyone uses the same measure...This measure to calculate the target price is the standard one used for H&S pattern but no doubt there are others measures Bullowski mentions a better method using the difference from Left hand neck to Head and then subtract the difference downwards from that same left hand neck TP = 2.65 - (3.22 - 2.65) = $2.08.. This measure can be used for all H&S patterns especially those with very steep necklines..
TP is a trading tactic, it works off the chances of reaching a certain price level to which traders start to take notice of the stock again, so there is no right or wrong answers just differing odds to reach the suggested TP..The standard measure I used finding TP of 2.19 has a 46% chance of reaching that TP...Xerofs 2.16 has lesser odds probably about 40%...(assuming AIR is in a Bull cycle)..

Bulkowski Book.. Encyclopedia of Chart Patterns..has this H&S pattern statistical data table

Decline (%).... Bull Market.... Bear Market
5 (breakeven)......4%.............. 1%
10 .................. 15%.............. 5%
15 ...................35% .............17%
20 .................. 54% .............33%
25 ...................68% .............49%
30....................78% .............63%
35 ...................86% ............ 71%
50 .................. 97% ............ 93%
75 ................ 100% ........... 100%
Over 75...........100% ........... 100%

The table says for example that 54% of the H&S patterns happening within a bull market cycle have ended their fall at or less than 20% after the breakout...Also there hasn't been a H&S pattern found that the shareprice has fallen more than 75% after the breakout.

There are factors which affects these odds...the 2.35 support line/trend line conjunction area you mentioned Baa Baa would be one factor

[Snow Leopard]

@Hoop @Xerof .. I can see the H&S but can't correlate the suggested target to any other price supports. What does stand out is the 4-year rising support trend line which converges around $2.35 with the Jun/Sep15 lows horizontal support. This weekly chart illustrates.
Attachment 8009

Find yourself a charting package that does a log price axis and you will see that the '4-year rising support trend' was well and truly broken by Friday 22-Apr.

200 day EMA broken by the closing price of Friday 22-Apr.

THEN the SP slid down the shoulder.

Best Wishes
Paper Tiger

Disc: Yes on my hobby horse about the use of log charts - again

[Baa_Baa]

@Hoop, thanks for the explanation . @Paper Tiger, thanks for the reminder

Using the Weekly chart again, but Log Scale, the convergence of support (4-year trend line & horizontal at $2.35) just "goes away". Pffttt, just like that, big MA's smashed, LT trend line smashed, convergence gone and only the $2.35 horizontal offering support, below that questionable $2.30 and clear $1.75.

Attachment 8011

Not pretty. What surprised me most about the discussion on AIR was that the words 'stop loss' have not been mentioned. Like Buffet said, when the tide goes out we see who's swimming naked. (or something like that).

[Xerof]

I posted that technical damage had occurred (in other words very high risk to buy now) but got knock down in flames by the verbal few..Their actions of filling up the AIR thread with rosy FA and forward FA verbal pollution resulted in an excellent post by Xerof being totally swamped and missed

Hoop and Baa, I've only just caught up with this thread - great work guys in filling in the detail. Sorry, but I haven't the time to be as diligent as you two. I relinquished my charting software quite a while ago so I'm just running on familiarity of patterning these days. I 'eyeballed' a measured target of 2.15 Hoop, so within 4 cents means I can forgo an eye test this year.

Speaking of diligent, I can recall commenting on very similar market behaviour a few years ago, around the 7.50/8.00 levels, generating a hatefest by those who forgot their togs.

[Horse]

Hi all, I've been following this thread and was wondering if I could get some friendly advice on a potential head-and-shoulders pattern on the SUM chart.

I would like to confirm that if the chart completes something like my dotted lines that this would be considered a head-and-shoulders pattern, and that my target price area would be correct.

I've tried to annotate it the same way as Hoop did above as I find his charts nice and easy to follow.

Thanks in advance.

sum-h-and-s.jpg

[peat]

Ideally the right shoulder should be similar in time duration, but truth is I'm thinking you are getting a bit ahead of yourself (in terms of anticipating the pattern).

Perhaps at this point one could merely say that $4.40 is playing out as an important zone, and a convincing break in either direction will confirm the trend.

[Horse]

Thanks peat, much appreciated.