Looking at the chart today from BrainChip (ASX:BRN) I can see they it has a couple of potential directions from here.
Over the last week or so, the stock has been retreating back from its highs of close to $1.00.
Overall though, I can see 2 possible scenarios.
Scenario A
Holding current levels (which look good considering the 61.8 fib line placement) here could see a price grab back up to above $0.50. Holding there would mean BrainChip is still maintaining an overall uptrend and also holding above the 50 fib line. Breaking through the next level of resistance at $0.64 is critical for recover efforts. A bullish scenario overall with some risk.
Scenario B
Failing to hold here would mean a fall back to previous support and older trend line around $0.34. A note here though that the old trend line has less touches, so holding it is yet to be determined. However, the fact that we have a trend line and a support line means we might see a bounce.
Options
If I was looking to gain entry, I can do so immediately, however I would be prepared for further volatility. A further fall back to $0.34 could mean a need to top up the position with more cash.
I can also choose to wait for one of the following scenarios:
- A clean break up and out of $0.64, signalling a much stronger bullish case. - A break down and a hold at $0.34, signalling a position of relative safety to begin investment.
Risk Management
I can deploy risk management techniques including limiting the percentage exposure to this stock, applying a stop loss if it falls too far or reserving cash to purchase lower entries and reduce my average, should I want a long term position.
Hope this analysis helps!
Note - this is a record of my thoughts for personal use only. Nothing here should be taken as financial advice. Investors and traders should always do their own research before buying or selling assets.
hey I'm a new trader who just started, I'm seeing alot of the fibonacci retratrading do you have any educational form that I can learn or any other platform that I can learn
glennleese
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@millomillo, hey there. Actually, yes I work with a number of trading mentors to provide education to traders through a monthly membership group we have. If you would like to check out the front page, go to marketmentor.co
cafraser9
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Thanks for the chart, was the run up to 0.97 a parabolic advance? I don't know the way in which this kind of advance can be measured
glennleese
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@cafraser9, not sure what you mean by that, but I personally measure the advance using trend line angles. If they are increasing in degree, I will hold the trade, if they reduce and break trend lines and support, I exit. Hope that helps.
cafraser9
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@glennleese, Thanks, I read some time ago that if a stock breaks a parabolic advance it will retrrace 80%, I am just trying to find out if the BRN chart qualifies as a parabolic advance. A well known trader claimed Btc was in a parabolic advance when it reached 20k and then it retraced to 3k, BRN appears similar.
glennleese
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@cafraser9, interesting. I have never heard of that. Drop a link in to some info if you have it, I'd love to check it out! We can work out whether it qualifies based on an official definition. Thanks!