BreakOuts

Hi Friends,


I am just starting this thread to identify Stocks which are possible candidates for a BreakOut (it could be any chart pattern).

All are free to post scrips here, so that we all can stay informed.

My first candidate is Wipro. It is forming an Ascending Triangle in Daily Charts.

If it breaksout, the first Traget is very near to 600.

Please do contribute in this thread.

Happy Trading

Satya

Note: This is not a Trading Tip. You are responsible for your trades.

Attached Images

Wipro_Aug_25_2006.png (18.0 KB, 248 views)

Wow Satya... thats a nice idea... Only thing is, we should expect that every b/o suggestion should be backed by some basis. It can be FA, TA, rumour or tip or just anything... so that it will be clear in the minds' of readers' how they should react to the news. What say ?

Regards,

Abhay (AAD)

Hi all friends,

i have a highly probable trade for Aftek info ( cmp:62 )
this has given a very good breakout above rectangle and wht makes this a high probable trade is the pullback after breakout.
Target is min. 75 in the coming days.

see the chart for more details.

Abhay,

Let's be clear. Its only TA which should be the deciding factor. However, we can include FA also.

No postings here based on Tips or rumours..

Be Technical, Buy Techinical...

Satya

Yes.. I agree with you 100%. Basically I don't trade on TIPS and RUMOURS at all. Why I said tips and rumours also is because, lets say, someone knows a tip / rumour and he is not able to do TA / FA for that scrip, then what ? Also, trend-following indicators will start showing a possible buy after there is a consistent buying action which genereally follows news (tip / rumour) like merger, acquisition by a large group, etc. which can help us catch this trend early. And since our decisions are going to be based on what charts say, we shouldn't be harmed if someone gives a tip which has no substance in it.

Anyway, it was just a thought and I too was not sure if tips/rumours should be a part of this thread (actually waiting for a post like this agreeing/disagreeing with what I said).

So as you say... let truth (TA/FA) prevail

Regards,

Abhay (AAD)

Dear Winstonn,

To make our analysis complete in all respects, lets give support / resistance levels also. I hope you will agree with me. To that respect, this stock has an immediate resistance at 66 and support at 61. Please correct me if I am wrong.

Technically speaking, it has not given b/o when you wrote. We can only say that it is going ahead in that direction and it is your expectation that it will give a b/o this time. It did gave a b/o on 17.08.06 but went into a heavy and longer pullback after that (which is not a characteristic of a true b/o). So actually speaking, this should be termed as a false b/o. (Am I right ?). We cannot / should not enter a position today on the basis of b/o given a few days back (again, am I right ?). Also, it is still showing -ve divergence on MACD-histogram (which is why it probably went into a rather longer pullback after 17.08.06). Personally, I would wait for it to close above the recent resistance level (66 -which happens to be a crucial resistance) to enter a trade.

Also as I see it, major trend of this stock is still bearish. The trendline happens to fall close to 75 at which, we can again expect a harsh resistance. For extremely short-term opportunists, this should not make any difference. The intermediate bullish trend is still intact.

As per your views, risk (62-60(stoploss assumed)=2) to rewards (75-62=13) ratio is more than 6 and hence gives a strong buy signal. As per my views, risk (67-64=3) to rewards (75-67=8) ratio just crosses 2. So there is a high probability that I will not enter this trade at all.

Market may prove me wrong. But I would like to know from you / other senior members if my analysis is wrong / incomplete.

With regards,

Abhay (AAD)

2/3rd of the breakouts will pull back and usually they take support at breakout level. Pullbacks does not negate a breakout. One needs to keep an eye on the volume of pullback and volume at the time of breakout and immediately thereafter to understand the strength of pullback.

There are two type of breakout traders in the market as well, one who enter immediately after the breakout and others will wait for pullback and both of them earn money in markets.

Another view of the same chart.

Best Regards,
--Ashish

Attached Images

AFTEK_TRI.png (17.3 KB, 101 views)

Thanks for quick reply. Please help me understand more on "support at breakout level" taking example of Aftec info. What should have been its support level after b/o on 17.08.06 ? Yes, b/o on 17.08.06 was well supported by huge volumes. How would you rate volumes on pullback in this particular case ? Although it closed higher today, it was not well supported by volumes.

Will you consider this b/o as a strong and valid one ? Also, would you consider taking a position NOW ? What other factors to consider apart from b/o to enter a trade like this ? (particularly when there is a strong pullback - latest is 61.8% on Fibonacci scale). Is it not still range-bound as it is yet to cross 66 (latest peak)?

I reanalysed this stock after reading your post. Found more than a couple to things favouring Winstonn's analysis as below.
1. I guess you are a strong user of RSI on which, this stock is extremely bullish.
2. Also, it is taking support at 13 day EMA everytime at pullbacks after 01.08.06 (as it did y'day) which is a good sign of a healthy uptrending stock.
3. It is also making higher tops higher bottoms since 01.08.06.
3. Most importantly, its weekly trend is still up which means that every pullback gives us an opportunity to enter a trade.

I think by the time Winstonn see my 1st post, he will not have to take trouble justifying his position. I have done half of his job already But I am still not 100% clear and convinced. I will definitely pass on this trade as I have not understood it 100%, but would like Winstonn (or like-minded others) to enlighten me with their rationale which will definitely widen my horizon.

Now my last question is, should we consider support / resistance levels and major trend as well ? What about current resistance at 66-67 and trendline falling near 75 ? Or just be cautious and tighten your stoploss when prices come closer to extreme resistance level ? Or wait for the prices to close above its major resistance ?

Just trying to analyse how experts see the things differently.


Thanks in advance.

Best regards,

Abhay (AAD)

To Watch this one also in 30 min

Jay

Attached Images

Afteck Info.png (14.9 KB, 66 views)

Well, after breakout, usually the broundry from which breakout has taken place will serve as S/R level. About volumes, if the volume on pullback is very low as compared to volume on breakout, we can assume that the pullback has just shaked a few weak hands or profit-takers and the smart money is still in the trade.

One can take into account S/R and wait for the price to cross but then its a question of individual philosophy and risk taking capability as well. Usually the stocks follow the measuring formula of a pattern but the trend may falter at S/R level. A time stop at those levels along with price-volume level will help the trader in deciding upon his next course of action.
IMHO, breakout was a valid opinion.

Further, about leaving or taking a trade, we are dealing with probabilities over here and perfect setup's are hard to come across in real trading life and we have to take risk in trading but certainly a trader has to take only those trades with which he is comfortable with. There are hardly any Black/White trading methods in markets. All of them has more or less shades of grey which is reflected in the word "probability".

I will also like to see how experts see the things. Waiting for their comments.

Best Regards,
--Ashish