1) From Jan 2009 until now, we observe that Price has been trading in an overall up trend channel, marked by the solid blue lines. This defines the general long term trend as bullish.
2) However, within the overall long term trend, there was a period of sideways consolidation between June 2010 to Dec 2011.
3) The actual up move in price happened when price broke out of the consolidation boundaries shown for Point 2. This breakout phase happened from Dec 2011 to Dec 2012. During this period, price had risen strongly from $45 to as high as $75 (+66%).
4) After the +66% up move, price went through another consolidation phase, fluctuating sideways between June 2013 to Aug 2014. This consolidation phase is similar to the one experienced in Point 2.
5) We detect a slight breakout of the consolidation boundaries and project that price is now entering a breakout phase, with price action similar to that of Point 3.
Profit Level 1: $90.00 Profit Level 2: 100:00
We observe that during the Breakout phase in Point 3, price has respected round figure levels, like $55.00 and $75.00. Therefore the Projected Profit levels are also based on round figures instead of theoretical measurements of the consolidation phase.
Risk: There is a risk that latest price up move is a false breakout, resulting in more sideways consolidation. This is why placing a tight stop loss just below $78.00 is a good idea. If this breakout move is genuine,the price should rise as cleanly as the breakout phase in Point 3.
There is also a risk that the Earnings Release on 20 Oct 2014 will have a negative impact on the breakout momentum.Therefore it might be prudent to take partial profit, closer to 20 Oct.
Comments
BreakOutArtist
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You're, welcome StockFlipper, hopes it adds values to your Trading experience.
Thank You for your support!
TheReeQueS
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This is my kind of projection about this. When Im looking for a long term investment, I guess this one could be a nice one. We've got a 100 MA supporting the price, a mid-term uptrend support inside the longterm uptrend. Not quite sure, if I would have bought it right away, but after a retest of a long-term support in mid 2015 I definetely will do.
YaKa
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now is the buy no?
BreakOutArtist
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Hmm this idea is no longer valid as it is stopped out at $78.00.
If we want to buy now, the only available supporting reason is because the trend channel will hold, which is not strong enough. At most it will drift slowly upwards over the next 6 months.
My personal point of view is that it is better to deploy capital efficiently trading breakouts ( ie capture price huge movement in short time periods), and time is precious especially to options/futures trader like yourself.
YaKa
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Interesting philosophy.
I noticed something though:
Often, the index gets of triangle, breakouts and then pulls back against the triangle apex before exploding up.
You may be right but the upside is not entirely dead until the potential scenario is cleared.
Thank You for your support!