This 6-month daily candlestick chart for BMO reveals that the near-term trend is up and the intermediate trend is sideways.
BMO - 6-Month Daily Chart
The most important concept in technical analysis is the trend: you always trade in the direction of the trend. The near-term trend for BMO, last three weeks, is up and is defined by the 10 day simple moving average (SMA) which is above both the 20 day and 40 day averages. The intermediate trend, last six months, is sideways with support at $58 and resistance at $62.
This brings up the another important concept in technical analysis — support and resistance. Take a look at the chart. BMO could not break $62 on three attempts over the last six months. Both the bulls and the bears have memories of this price point. BMO will meet technical resistance at $62 in this rally.
The three confirming indicators:
Volume is relatively light which is a negative indicator.
On Balance Volume (OBV) is trending up with the move which is good.
Relative Strength Index (RSI) is trending up which is good.
The shaven head ( stock closed at the high for the day) white candlestick for Thursday was positive for the bulls.
Note: This analysis is for educational purposes so you can learn to trade online using candlestick charts. Please conduct your own analysis or consult your financial advisor before making investment decisions.
The chart snippets are from BigCharts.com which I recommend and have used for fifteen years.
A shooting star candlestick developed on the daily candlestick chart which can be compared to a caution light.
It shows that the rally could not be maintained. The stock opened at $40.82, above the close for the previous day’s bullish white candlestick, which was a strong opening. But the bulls could not maintain the push as the stock rallied to a high of $41.59 where there was selling pressure and the stock closed at $40.87: this was not a good day for the bulls.
3-Month Daily Candlestick Chart
The trend is the most important concept in technical analysis. The intermediate trend (3 weeks to 3 months) is sideways and the near-term trend (within the last 3 weeks) is up. What we are trying to establish in this analysis is the likelihood of the near-term trend continuing upwards. Today, there is a hint of caution which you can see pictorially in the shooting star candlestick pattern.
Another important concept in technical analysis is support and resistance. On Monday, Shoppers Drug Mart closed above resistance at $40. This has been resistance for the last four months. The $40 price point reverses rolls and is now support for this stock. A close below $40 would be very negative for the near-term trend for Shoppers.
Shoppers Drug Mart breaks technical resistance at $40 on this candlestick chart.
TradeOnline.ca featured Shoppers on February 6 and highlighted the first bullish white candlestick that developed on above average volume. Above average volume is a confirming indicator and is the fuel that drives the upward trend. The $40 level is now support and the stock must hold above this point for the trend to continue.
Shoppers Drug Mart (SC) 6-Month Daily
Shoppers Drug Mart will meet heavy resistance at $42. You can identify this point on the 3-year weekly chart.
Shoppers was upgraded from hold to buy on February 11 and the price target was raised to $43 from $39.
Note: This technical analysis is for educational purposes so you can learn to trade online using candlestick charts. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years.
The most important point in technical analysis is to determine the trend.
The intermediate and near-term trend for Pfizer (PFE) is up. This drug stock had a very good move last week as indicated by the tall bullish white candlestick. Also, the volume was above average: the volume is the fuel that drives a stock higher. Any upward price movement on low volume is suspect. If the stock can break resistance at $20, the next target price will be $22.
Pfizer, including other drug stocks, has underperformed the Dow over the last couple of years. Pfizer has a decent yield of 4.15% and a solid cash flow. Now, traders are buying this orphan.
The intermediate trend (three weeks to three months) for Suncor is up.
But the shooting star candlestick is a warning signal: it is like a yellow light indicating caution. I do not want to see a close below $40 which is a support level. The next major support point would then be $35.
There was a bullish white candlestick for Shoppers Drug Mart (SC) on Friday, February 4.
It opened at $37.15 which was above the support level of $37.00. The stock traded to a high of $39.13 and closed at $38.77 which was a gain of 4.18% for the day. The tall white candlestick is the graphical representation of that price action.
Please customize and then reference the full-size chart from Bigcharts.com for a better overall view of the trend. Shoppers has been trading sideways since October so a break above the $40.00 resistance level would be a significant event.
Yes, it is definitely up. Defining the tend is the most important concept in technical analysis. You must always trade in the direction of the trend and jump aboard for the ride. Use candlesticks and other confirming indicators — moving averages, on balance volume and momentum indicators — to determine when it is time to exit the trade. All the indicators will be reviewed in future posts using real time examples. And, the objective of the site is to keep-it-simple: anyone can complicate a topic.
BCE 3-Year Weekly Chart
See the article in the National Post on the analyst upgrade for BCE.