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by Arthur Hill
CH Robinson broke double-top support on big volume, and the forecast is for lower prices in the coming months.
Position: Sell
Arthur Hill
Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.
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DOUBLE TOPS
CH Robinson Confirms Double Top
10/19/06 08:21:47 AMby Arthur Hill
CH Robinson broke double-top support on big volume, and the forecast is for lower prices in the coming months.
Position: Sell
| On the weekly chart (Figure 1), CH Robinson (CHRW) more than doubled from April 2005 to April 2006. The stock met resistance at 53.13 in April 2006 and then corrected to 42 in June. Note that broken resistance at 42 turned into support and the stock bounced back to 55 in July. The bounce back to the April high failed and the stock quickly fell back to support in August. Even though the highs are not exactly equal, the essence of a double top is there with two failures in the mid-50s and a reaction low in between at 42. |
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| FIGURE 1: CH ROBINSON, WEEKLY. CHRW more than doubled from April 2005 to April 2006 before it met resistance. |
| Graphic provided by: TC2000.com. |
| Graphic provided by: Telechart 2007. |
| |
| The stock stalled just above support for a few months and broke down in October. CHRW broke the April 2005 trendline as well, and this confirms the double top. The length of the pattern is subtracted from the break point for a downside target. Because the two highs are different (53 and 55), I will take the middle and use 54 (54 - 42 = 12, 42 - 12 = 30). |
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| FIGURE 2: CH ROBINSON, DAILY. The triangle break coincides with the double-top support break. |
| Graphic provided by: TC2000.com. |
| Graphic provided by: TeleChart 2007. |
| |
| Turning to the daily chart (Figure 2), we can also see a triangle break this past week. This coincides with the double-top support break and volume surged to its highest levels since April. The surge in volume shows increased selling pressure and this validates the support break. Broken support at 42 now turns into resistance and this is the first level to watch for signs of a recovery. I would set key resistance a little higher, however, and make the stock break 46 before negating the double top and turning bullish again. |
Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.
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Date: 10/20/06Rank: 4Comment:
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