(2) After breaking the uptrend line mentioned in (1), Price consolidated sideways and subsequently formed an obvious Pattern. This is confirmed when price broke out below the Neckline of $75.93 on 23 Sep 2014 and headed as low as $62.75 on 15 Oct 2014.
(3) Following the low of $62.75 on 15 Oct 2014, Price pulled back and was subsequently further resisted around Neckline price of $75.00, before continuing to trade lower.
Therefore from the observed points so far, we project that price is poised to breakout below $62.70, to continue the established by the Head and Shoulder Pattern.
(Break Out Condition) When price can convincingly close below $62.70
(Stop Loss) Above $68.50
(Target) $42.20, based on minor Support levels
(Time Limit) All Short positions should be closed by 19 Jan 2015
Generally price break outs can only sustain momentum for short period of time, before retracement and pullbacks starts to occur. In other words, we estimate that the breakout price action should complete and achieve its price targets by 19 Jan 2015.
(Risk) As always, there is always risk of a false breakout, coming from a trap.
Head & Shoulder Patterns> http://www.investopedia.com/articles/technical/121201.asp
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We have past the time limit (19 Jan 2015) for this idea and hence the idea is no longer valid.
It might be prudent to close Short positions if you have traded solely on the basis of these idea and re deploy the capital on other breakout ideas.
So far there is no breakout move and it is more of a general bearish environment causing prices to drift lower.
This why most of my ideas are about following the trend, because if the breakout move does not occur, the general trend can help to move prices in your favor and avoid having a losing trade.
Thanks for liking the idea.
A) Basically we measure the number of "bars" it took to plunge down from around 102 to around 64, which is 37 Bars.
B) We are making the assumption that $75.00 high, on 2014-11-26, was the starting point of the next wave of bearish make.
Therefore we project this "37 bars time limit" from the $75.00 high, on 2014-11-26, and count 37 bars forward, to reach 2015-01-19.
C) Take note that this is just an estimation and not an exact science.
The projection in B) is based on the rationale that if this is a genuine breakout, then it should complete its bearish move with the same speed as the previous down move, if not faster.
Another example of using time limit is shown in a previous idea that I had written. If shorts were held past the time limit, we will run into the risk of pullbacks.