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CHART ANALYSIS


Big Blue Is On The Move

09/19/03 09:05:28 AM
by Andrew Hetherington

IBM has recently broken above its $90.00 resistance area. How far will it go?

Security:   IBM
Position:   N/A


Figure 1: Daily chart of IBM.

IBM's daily chart clearly illustrates that an impending breakout was likely. The increasing volumes off of the most recent bottom, along with a strong upside move, suggested a breakout. There is also the strength coming from the 11-month ascending triangle. The volume on this triangle is near perfect and slowly diminishes throughout the creation of the pattern. The bounce off of the third fan line with the higher volumes demonstrates the strength of the large pattern. But taking a long position on this knowledge before the breakout would have an increased risk since it was still within the pattern, however the downside was limited.

Figure 2: Weekly chart of IBM.
Graphic provided by: SuperCharts.
 
On the weekly chart you can see the diminished volume and the fan lines easier. The breakout should move to the $95.00 area before the inevitable throwback to the line. After which another move higher to the next resistance area of $100.00 and then $108.00 is probable.



Andrew Hetherington

Classic Dow Theorist who trades as a pure technician, using pattern recognition.

Toronto, Canada

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Date: 09/19/03Rank: 4Comment: 
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