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UK stock market

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HiIamhere
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« on: May 10, 2013, 02:44:44 PM »

Hi everyone!

I 've recently invested time into reading trading tips, guides etc. It is all about paper trading till now, and surely I am not yet ready for a real money account.
Anyway, I am mostly analysing charts with basic support/resistance levels. Not messing with indicators yet. So I thought to share an insteresting case I 've spotted.

HSBC - Weekly Chart (going back 4 years)



HSBC - Daily Chart (going back 1 year)




HSBC - 4H Chart (going back 3 months)



My thoughts

We can witness that we got a strong resistance level at the price of 740.00, confirmed in multiple time frames. The stock is about to test this resistance level any time soon. It may not touch it but it is pretty close anyway. My decision will be based on the daily chart.

1st Scenario (Buy) : Resistance level gets broken. I would wait the price to get to 750 and then place my stop loss at 740 and a target price at 790 (below the last resistance level seen at the weekly chart). That gives a satisfying reward/risk of 4/1.

2nd Scenario (Sell) : Imo it is not necessary to see the stock testing the actual price of 740 to enter short. So in case I see 2-3 consecutive red candles in the daily chart I 'll go short since I'll consider the stock to have confirmed the downtrend shown in the daily graph above. With this in mind my stop loss would be set at 745 and my target would be below the previous bottom, at 660. Supossing the price in this scenario will be around 730 when I enter that gives a reward/risk ratio of 4,7/1.

As I was writing the price tested the 740 resistance in the 1 minute chart failing to break the level. Does not affect my scenarios since I am looking to much bigger time frame but thought I should mention it anyway.




Share your thoughts if you would like. I am in the learning stage and can absorb knowledge like a sponge right now  ;D
« Last Edit: May 10, 2013, 02:52:48 PM by HiIamhere » Logged

Arbusers
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« Reply #1 on: May 10, 2013, 05:16:46 PM »

First of all thank you for starting this thread.
This stock ia in a cross road.
On the one hand, all stock markets are rallying like crazy. The money printed looks like confetty. The coordination with other stock markets is perfect and if we see everything under this glass, this stock must rally too.
On the other hand, this price was tested several times. Banks are not the number 1 choice in this era.
No matter how much i look, i see more posibilities that this stock will rally.
Your thoughts on both scenarios are good.
Let's see.
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HiIamhere
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« Reply #2 on: May 13, 2013, 06:34:20 PM »



After today's candle formation I 've decided to enter long. It's not a hammer but still demonstrates that although many people were selling there is power from the buyers who managed to keep the price almost at break even. It even dropped at 728 from 740 but the fact that it close well above 728 tells me there is significant buy power. The only reason I already entered from today and did not wait for tomorrow's open is that I am hoping for an upwards gap in the price tomorrow. Maybe I am risking a little more and should wait for one more green candle above the 740 resistance level but I think the odds are in my favour.
Stop loss is set at 730 but I 'll be moving at 740 if I am given the chance.
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Arbusers
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« Reply #3 on: May 13, 2013, 09:07:49 PM »

It is a reversed cross. What happened last time there was a reversed cross? Take a look at the graph.
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HiIamhere
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« Reply #4 on: May 14, 2013, 04:57:36 PM »

Price moved up today to 743,90 from 737,35. Good enough for me to place a new stop loss at the critical price of 740,00. I am in a win-win situation now since I am making profits even if the new-stop gets hit but of course I am hoping for the uptrend to continue for bigger profits.

@ Nick

Well I can spot some reversed cross candlesticks in the chart and see what happened after but the candlestick pattern is just a piece of the puzzle for making my decision. I wouldn't rely solely on it.
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HiIamhere
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« Reply #5 on: May 15, 2013, 07:28:50 PM »

Today's close @ 754,4 of HSBC was good for my long position.
I won't define a target price. I believe that this stock can make a strong run. I 'll be using trailing stop loss untill I am stopped out. The stop loss will always be put below the lowest price of the last 2 days.

In the mean time I went long on Centamin today about 2 hours before the close (already covered the spread loss :))



Reasons for my position :

-Nice double bottom = good support level.
-I consider the stock to be in an uptrend.
-That gap was caused because of some bad news on 10/05, in my opinion this is giving me a chance of low risk trade - high reward trade.
-Good swing point formed (low-lower low-higher low).
-RSI formed a higher low (not shown in chart), indicating uptrend.

Against my position is the fact that the price is below the 200 SMA and that the 10SMA has not crossed the 30EMA yet (but seems about to).

Stop loss set @ 35,00

Trade well
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