Preston,
The stock chart in question has indeed penetrated the bearish resistance line, but only by one box before the pullback. While it does appear to be in a series of bullish patterns, this is occurring just under the BRL and this weakness 'at the barrier' bears close scrutiny. IF the current pullback doesn't continue down past the current short term bullish support line and the next up column gives a buy, then I would feel safer about this stock. Without knowing what happened the day the stock 'peeked over' BRL one is still kind of navigating by the seat of the pants with this one. For example, the DOW could have been up 200 points on 750M shares traded that day and general market momentum buoyed the stock over the line. Or, it's sector could have been upgraded and all the issues climbed. Or, it could have the word 'internet' in it's name :-)) (We all need to remember that even garbage floats in a flood). In these cases, it might not be the merits of the stock itself that 'popped' the line. Kind of like a gopher popping it's head out of it's hole, only to burrow back down.. But if the DOW was down, and the stock went up on some fundamental good news, or if been after a steady uptrend on decent volume, I might feel better.... but me, (Ben A, a little more conservative, risk adverse) I would still wait to see if it found bullish support and then confirmed the breakout with another buy signal.
RE the box scaling. The patterns formed still hold with boxes of 'non-traditional' scaling. The timing for patterns to develop and the H/V counts are more tricky. But if you are day trading, or penny stock trading, or commodity trading you almost have to use smaller box deltas because the Chartcraft scaling requires such huge percentage price changes to get 3 box reversals. Many P&Fers use scalings other than the ones commonly referred to in this thread.
JMHO
Ben A. |
