(Click On Chart To Enlarge)VPHM has crashed twice, in as many years.
The dominant pattern on the chart is the one in blue, the Falling Wedge. It had a downside fakeout (Bear Trap), and then an upside fakeout (Bull Trap) at the release of August earnings. When it broke decisively below the pattern, it crashed in earnest.
VPHM has been forming a Symmetrical Triangle since the August low, which was an Exhaustion Gap. Heavy volume. 10 million share day, which finished on a Bullish Doji Star hammer. We usually don't want to go "knife catching" when a stock is in freefall to the downside, but a BUY of that candlestick near the close would be justifiable, in my view. Stop loss below the low of that session, if we did buy it.
See "Gaps and Gap Analysis" at the bottom of this link, then read about Exhaustion Gaps: http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis
Coming off that low, VPHM has been basing in a Symmetrical Triangle (pattern in green). It's a relatively weak base, in that it's only of two months' duration, but what I VERY much like about it is the fact that there have been TWO successful re-tests of the bottom of the pattern.
We can connect any two data points, and call that a trendline, but we don't know if it's an important trendline until THE MARKET tells us that it is, by testing it, and by finding support like VPHM did at the close on October 1, and the open on October 2.
That's called a TRENDLINE VALIDATION.
We got a second trendline validation at the close on Thursday, October 11, and a move higher off that second validation on Friday, which is why I bought VPHM. As I said, it's not a great pattern, but I like to buy (or short) stocks that act well, technically.
The upside breakout number for Monday, October 15, is a print above 9.9254, so 9.93, and we obviously want to see the 9.99 high (Green #4) get taken out. Next objective would be the recent high of 10.30, which is the top of the pattern.
My stop is below Thursday's 8.86 low, so not much risk (excluding a gap down, of course).
3 comments:
hi Melf, cold you please contact me via mail? oliver.huss@web.de
cheers
Oliver
I have answered your mail.
Is ROCM a ascending triangle?
http://stockcharts.com/charts/gallery.html?rocm
cheers
O.
Oliver,
No. Coming off the 13.26 low, ROCM formed a Symmetrical Triangle.
Start at the low, and label it #1.
The first high, label #2
The next low, label #3.
The next high, label #4.
Now, connect your highs and lows, and you'll see your Symmetrical Triangle pattern, and where it broke out.
Currently, You've Got a Descending Triangle. Connect your lows, then draw a down trendline from the recent high, connecting the highs.
Best,
Melf
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