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 author of this article may hold long or short positions in the featured stock or index.
Can Precision Drilling (PD) hold the new support level of $12?
Precision Drilling Daily Chart
The most important points to note in the Precision Drilling (PD) chart analysis are:
The major trend, intermediate trend and near-term trend are all up.
The 40 day moving average is a good approximation of the trend line.
Always trade in the direction of the trend.
There was a breakout above resistance of $12.
Major support is now $12.
The reversal of resistance to support is an important principle in technical analysis.
The breakout was on above average volume.
Trading volume measures the force behind the move.
On balance volume is confirming the upward trend.
The MACD confirmed the breakout.
If an online trader made a buy on the breakout at $12.50, the trader must set up a stop-loss at that time. A reasonable stop-loss would be below support at $12. A stop-loss of $11.87 would represent a loss of around 5% and maybe not close enough that it would be taken out on a light test of support. Anyway, you will be around to trade another day. Risk management is an important concept in online trading. Preservation of capital is rule #1.