Tag Archives: trend

The trend is up for the S&P/TSX

The long-term trend, intermediate trend and the short-term trend are all up for the S&P/TSX as of Friday, February 18.

All the technical indicators look good. But, the market had a good run and I think it is overextended.  What will be the excuse to book profits? Investors are looking for a reason.

A 6 month candlestick chart for the S&P/TSX showing that the long-term, intermediate, and short-term trends are all up.

S&P/TSX 6-Month Daily Chart

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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.

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Shooting Star Candlestick for Shoppers Drug Mart

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.

Candlestick Analysis - shooting star candlestick for Shoppers Drug Mart

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.

Is there any doubt about the trend for BCE?

The 100-day moving  defines the trend line for BCE

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.

Technical Analysis: BCE 3-year weekly candlestick chart with the moving averages, volume and momentum indicators.

BCE 3-Year Weekly Chart

See the article in the National Post on the analyst upgrade for BCE.

Note: This analysis is for educational purposes. 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.
 
Copyright © TradeOnline.ca All rights reserved

TSX in a consolidation pattern – Jan 24, 2011

Technical analysis gives you a guidepost to make investment decisions and  takes some of the emotions out of those decisions.

TSX Daily Chart - Jan 24, 2011

TSX Daily Chart - Jan 24, 2011

The snippet of today’s chart is snipped from a customized 6-month daily candlestick chart of the TSX. I use the 6-month and the 1-year daily charts to establish the near-term trend (less than three weeks) of the TSX index.  The 40-day, 20-day, and 10-day moving averages are used in conjunction with the candlesticks as confirming indicators: the 40-day average is currently a support level on the chart.   The following is a summary of the price action on the chart:

  • Bearish Engulfing Pattern (highlighted in red) formed last Wednesday which was very negative after the TSX broke 13,500 on Tuesday.
  • On Thursday,  the market gapped down and a spinning  top candlestick formed with the shadow touching the 40-day moving average.  This candlestick shows indecision in the market with a battle between the bulls and bears.  The plus on this day was that the 40-day moving average was not breached.
  • On Friday, the market sold off on heavy volume but held the 40-day average.
  • Today, another spinning top candlestick formed. There are two pluses for the day: the market bounced off the 40-day and closed above 13,300.

Conclusion:The major trend (in effect for six months to a year) as seen on the 3-year weekly chart is up as defined by the 50-day simple moving average. The 40-day moving average as seen on the 6-month daily chart and in the snippet  is also a good approximation of the the trend.  But, as discussed in today’s analysis; the short-term trend is moving in a sideways (consolidation) pattern.  The recommended strategy at this stage is to invest no new money in the TSX until there is a confirmed break above 13,500.  If the market breaks down through the 40-day moving average on the daily chart, it is time to liquidate some long positions.  Major support is at 13,000 and a break through this level could see a retracement to the  12,500  level.


Note: This analysis is for educational purposes.  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.

Copyright © TradeOnline.ca  All rights reserved

Canadian Stock Market- TSX – January 12, 2011

What is the major trend for the TSX?

That is the first point in technical analysis: you cannot invest against the trend. Take a look at the current 3-year weekly chart for the TSX.

It is evident that the major trend — being in effect for at least six months — is  up.  Over the last five months (August – January), the 50-day moving average has defined the trend.

TSX Weekly Chart

TSX Weekly Chart - Jan 14.11

This week, the 50-day average acted as support on a pullback. Another point to note on the 3-year chart is the area of major resistance which is currently 13,500. Major support on this chart would be 13,000.

The snippet of the chart at the right highlights the trend line and the areas of major support and major resistance. Trend line, support and resistance are important concepts in technical analysis. Future posts will explain these concepts in detail.

The next post will focus on the one-year chart with daily candlesticks (the price action for one day). This will give us a better picture of the intermediate (three weeks to three months) and near-term (less than two or three weeks) trends.

 

What are the appropriate trading strategies based on this 3-year chart:

  1. The TSX is in a consolidation phase. Do not add to long positions
  2. A close above 13,500 would would be a signal to add to long positions.
  3. A close below 13,000 would be a signal to liquidate some long positions.
  4. A close below 13,000 may also be a signal for some experienced traders to take short positions.

Note: Each candlestick on the chart represents one week of price action.

Note: The above analysis is for educational purposes.  You should conduct your own analysis or contact your financial advisor before making trading decisions.