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In this edition of Charting Stocks For Dummies I will be breaking down 3 phases of a stock I recently recommended. This example will also show why it is in your favor to continue watching the same stocks.
If you want to learn more about these charts and other technical analysis skills, then check out Chart Pattern Manifest.
The particular move we will be looking at here is of JA Solar (JASO), a favorite of this website. You can see my initial analysis of this chart here. Within a week the stock has made a 34% move higher, and could go further.
Phase 1
The initial analysis was fairly simple: There seemed to be support around the 200-day moving average and both relative strength and MACD were looking to turn higher.
Given the previous high of $6.75. The chart alone shows you the massive amount of potential upside left in this stock.
I also want to point out that the most recent move in this stock was a move back above the 200-day moving average with its largest volume since dipping below. A good sign of trend reversal.
Phase 2
Rather than making anymore analysis, this chart further elaborates why the 200-day moving average for this stock in particular is so strong. Within the last year alone, this average has held strong 6 times. So with the recent confirmation of the move higher, it was safe to say the stock had some room to run.
Now I have been trading this stock for the last 9 months, and, like many of the stocks I trade, I have been following and playing with them for so long, so I know their tendencies. This is was helped me catch this particular move in JASO.
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Certainly this method isn’t the most advanced technique, but it’s easy and gets the job done.
Phase 3
In my experience stocks like to move in groups of three. Very rarely have I ever seen 4 or more consecutive large volume days; nonetheless, we now have another distinct trading levels. Should JASO stay above the 62% retracement, then the stock remains a buy.
So there you have it. To learn more technical analysis skills in detail, sign up for Chart Pattern Manifest.