Here's an update on the ILMN Break out idea.
i) Confirmation that breakout is now confirmed
ii) New price target
Price of Illumina ( ILMN ) has been rising in an accelerated trend, between Feb 2013 to Feb 2014.
Price has risen from around $50 to $180 during this accelerated uptrend period.
As with all accelerated (parabolic) chart pattern, price corrected sharply to around $130 (about -27% from high of $180) and consolidated sideways from Feb 2014 to Oct 2014.
This consolidation forms an pattern with a minor breakout above $180 on around 2014-10-21.
Triangles are essentially continuation patterns, so therefore the breakout indicates intention to continue the .
After the minor breakout of the , Contrarian traders tried to trade against the trend and forced out a false breakout of the .
However we can note that there is support buying right above the breakout level of $180 and the tide is turning against the contrarians.
This also means that possible stop loss orders, of these traders who are currently short, may fuel price momentum higher.
The moment the market is convinced $180 support will hold, there is no where else for price to go, but upwards.
If we trace a line against the last 3 significant price lows, we can see a potential accelerated price pattern forming as well.
This means that there is a possibility of a sharp vertical movement in price, if the price intends to trade higher.
Based on all the points , , and since price has closed above significant price level of $200, we project that price is likely to trade higher.
Also, there is a chance of price trading higher in an accelerated fashion, as mentioned in .
Breakout has been confirmed and Entry can be made, as long as price is above $198.00.
Reason: If you put yourself in the shoes of a contrarian trader who are currently short, it is logical for you to place a reasonable stop loss just after $200.
Therefore triggering of short stop loss orders above $200 plus breakout buying and will likely drive momentum for price to "lift off"
Price Target: 230.00
This is simply the theoretical measure of the Chart Pattern.
Therefore we can consider taking partial profits along the way, if price manages to trade and accelerate higher.
Another Technical profit taking guide will be to take partial profit each time (14) crosses 81.
You can look back at the (14) vs the Price, between 2014-01-13 to 2014-02-24, to get an idea on how to execute this method.
As always, there is always a risk of a false breakout, gets sharply resisted and trade back down to stop loss level.
There is a risk that the Release on Jan 27 2015 may severely affect the price in a negative way.
Lastly, as price may trade in an accelerated price pattern, it is likely that price will correct sharply (mentioned in ) when buying momentum cannot be sustained.
Therefore it might be prudent to accept that we can never capture 100% of the up move and be contented to take partial profit along the way.
Triangles Chart Pattern: http://thepatternsite.com/at.html
Example of Sharp sell-off After Acceleration: http://farm4.staticflickr.com/3705/10967030004_57497f156f_o.png
Accelerating Price Chart Pattern> http://blog.forex4you.com/trading-the-parabolic-curve-pattern/
Using Levels of Index> for the Trading Professional by Constance Brown, Chapter 1: Oscillators Do Not Travel between 0 and 100.
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