Briscoes has been in a downtrend for about 18 months now, and I think it has bottomed out. It's only fair to point out though, that I have thought this before - five times, in fact. I was particularly confident I was right the time BGR found good support at just over 140, as marked by the pale blue dotted line. Wrong. Again. Each and every time, prices rose only to reverse and continue the downtrend without breaking above the trendline. Who knows how low this will go? Obviously not me!
The chart below shows just how timely trendline break signals can be - those selling on the trendline break realised almost all of the gains made in the preceding uptrend. The other five indicators plotted here gave Sell signals a week or two later, though at lower prices, of course.
Many people use trailing stops that are based on a price drop of a certain fixed percentage. This figure could range from less than 5% to over 20%, depending on the volatility of the stock in question - it needs to be varied for each individual stock. Trailing stops based on a stock's Average True Range do not have this problem - they adjust themselves automatically to variations in volatility. The idea is to choose an ATR multiple that is appropriate to your trading style. Short-term traders might use a stop that trails prices by, say, 3 times a stocks average range. Medium term traders might use a multiple of, say 6, while those interested in the long-term might want to use a stop that trailed prices by 12 times the average volatility. The aim here is to react only to price moves that are of a significant magnitude over and above the normal volatility. The chart plots a trailing stop with a multiple of 11 times the average volatility of this stock.
BGR is rising and nearing the trendline - as it has many times over the last year. None of the six plotted indicators that gave such good exit signals have indicated a buy yet.
The magenta line plotted after the Sell signal is an eleven times ATR trailing stop such as would be used by a conservative trader that sold BGR short at the trendline break. They would cover their short when BGR broke above this line, so of course this event would make a good conservative "Buy" signal as well.