Dear Fellow Risk Takers,
Here's a price chart where in one quick glance, it is clear where the price is very likely to trade, going forward.
Regardless, it is still prudent to do our due diligence and work out the details>
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 Ascending Triangle 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 bullish trend.
After the minor breakout of the Triangle pattern, Contrarian traders tried to trade against the trend and forced out a false breakout of the triangle pattern. 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.
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 , 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 .
Enter Long when market can convincingly close above $198.00.
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.
Hence the intention of this entry condition is to enter just before the avalanche of buying momentum are triggered above $200.
Below $190.
To be honest how high the price can go is anyone's guess.
However we can say that price is likely to at least try to reach for the psychological significant price of $250.
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 RSI(14) crosses 81.
You can look back at the RSI(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, where price rises to $200, gets sharply resisted and trade back down to stop loss level.
There is a risk that the Earnings Release on Jan 27 2015 may severly 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 upmove and be contented to take partial profit along the way.
Triangles: A Short Study In Continuation Patterns> www.investopedia.com...hnical/03/091003.asp
Example of Sharp sell-off After Acceleration: farm4.staticflickr.c...004_57497f156f_o.png
Accelerating Price Chart Pattern> blog.forex4you.com/t...bolic-curve-pattern/
Using Support and Resistance Levels of Relative Strength Index> Technical Analysis for the Trading Professional by Constance Brown, Chapter 1: Oscillators Do Not Travel between 0 and 100.
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Here's a price chart where in one quick glance, it is clear where the price is very likely to trade, going forward.
Regardless, it is still prudent to do our due diligence and work out the details>
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 Ascending Triangle 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 bullish trend.
After the minor breakout of the Triangle pattern, Contrarian traders tried to trade against the trend and forced out a false breakout of the triangle pattern. 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.
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 , 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 .
Enter Long when market can convincingly close above $198.00.
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.
Hence the intention of this entry condition is to enter just before the avalanche of buying momentum are triggered above $200.
Below $190.
To be honest how high the price can go is anyone's guess.
However we can say that price is likely to at least try to reach for the psychological significant price of $250.
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 RSI(14) crosses 81.
You can look back at the RSI(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, where price rises to $200, gets sharply resisted and trade back down to stop loss level.
There is a risk that the Earnings Release on Jan 27 2015 may severly 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 upmove and be contented to take partial profit along the way.
Triangles: A Short Study In Continuation Patterns> www.investopedia.com...hnical/03/091003.asp
Example of Sharp sell-off After Acceleration: farm4.staticflickr.c...004_57497f156f_o.png
Accelerating Price Chart Pattern> blog.forex4you.com/t...bolic-curve-pattern/
Using Support and Resistance Levels of Relative Strength Index> Technical Analysis for the Trading Professional by Constance Brown, Chapter 1: Oscillators Do Not Travel between 0 and 100.
Like it, Share it, Follow it~
Trading View: BreakOutArtist
StockTwits: stocktwits.com/BreakOutArtist
Twitter: twitter.com/BrkOutArtist
TradeHero: BreakOutArtist
Facebook: www.facebook.com/brkoutartist
