Re: ABP ..... In looking at ABP, let's look first at the longer term chart. I will use a "top down" approach to technical analysis. The longer term chart in this case will be the weekly chart.
When I look at the price pattern for ABP, I see two chart patterns emerging at this time.
1. Price has formed a symmetrical triangle over the last 9 weeks.
Technically speaking, a symmetrical triangle is a rally to a relative new high, a pullback to an intermediate term support level, a second rally that does not exceed the recent high, a second decline that falls short of the intermediate term support level followed by a breakout on strong volume above the trend lines created by joining the new high and the secondary high.
Why does it happen and how do you play it?
baresearch.com
2. Price has also formed a triple inside day.
A triple inside day involves the last 3 candlesticks only. The trading range for the past week is inside the trading range of last week. The trading range for last week is inside the trading range of the previous week. In other words, it's a symmetrical triangle on a much smaller scale, it only involves the last 3 candlesticks.
A triple inside day confirms low volatility, It shows that over the longer term, since we are looking at a longer term chart, the battle between the bulls and bears is considered a draw. If we could draw a 3 week chart, instead of just a weekly chart, it would show the 3 week pattern as a Doji.
Triple inside days are indicating a break is coming. What it doesn't show, is the direction of the break.
How do you play it?
You wait for the market to tell you which way price is going to break. You buy just above the high of last week's trading range, or you short it, (if it can be shorted), just below the low of last week's trading range. Once the break comes, you switch to the strategy of the longer term view, listed above. Or, you wait for the longer term strategy in the symmetrical triangle pattern to work out.
That's what the chart is showing if look merely at price, and price is king. It's the most important indicator there is.
Volume and money flows are the filters I use to gauge the strength or weakness of price movement. Volume isn't telling me a lot, so I'll focus on money flows.
When you look at the accompanying chart, note the price point at the end of March 2005. Price set a pivot high around $3 and then reversed. This is our starting point to measure the strength or quality of price movement.
The green arrows will show price rising from $3 to $8. During that time, look at the rising trend caused by money flows, also noted by green arrows. In this case, money flow was confirming the strength of price movement.
Then take a look at the red arrows. Money flows have had a steep drop off. Money flows were greater when price was at $3 than they are with price at $6. Unless this trend changes, price in all probability, will not test the recent highs.
stockcharts.com[h,a]waclyyay[dd][pb50!b20][vc60][ilc20][J63158079,Y]&listNum=1
Let's look at money flows from another perspective. In the next chart, there will be 3 windows showing money flows from a different perspective.
Window one is showing money stream, as it is called here, overlaying price. Money stream is noted as the light blue line. Note the location of money stream through the end of 2004 and the first 9 months of 2005. Money stream was above price. This is known as a bullish divergence. Price followed money stream. Then note how money stream is now well below price. This is a very bearish set up.
Window two is showing money stream and how it relates to a 50 week regression channel. When price rose above the upper channel line, you got that explosive move to the upside. Now note where money stream is in relation to the regression channel.
Window three is showing price as it relates to a modified Bollinger Band. This is considered a momentum band. When price rises above the upper band, and you are getting separation between the bands, you get the explosive upside move that the price chart confirms. Then note where money stream is today and the direction of those momentum bands.
ttrader.com
If your view is longer term, you must respect what the longer term chart is trying to tell you.
In looking at the daily chart, which only sets up the next 2-5 days of trading, we see that the 20 day moving average is declining and it has now dropped below the 50 day moving average. This is bearish.
Price failed to break out above the 50 day moving average. It has now made 5 attempts at breaking out above it and failed. Note how the 50 day moving average was serving as support from November 7-10. From November 11-18, price has failed to break out above the 50 day moving average. The 50 day moving average is now serving as resistance.
stockcharts.com[h,a]daclyiay[d20050919,20051119][pb50!b20][vc60][J63158079,Y]&pref=G
If ABP is going to rise, it needs a catalyst. An upgrade, a weather change, something. Otherwise, money flows are showing a lack of interest.
dabum |
