|A look at August Technology's chart below tells me the following:|
August Technology fell with a gap in July 2002 and then spent the next four months, till November, building up a consolidation strength and rising to fill that gap at $7.51 after reaching a low of $3.46 in August 2002. At the same time, it created a "head' in what appears to be a head and shoulders pattern, forming the right shoulder in January 2003. The calculation from the head to the neckline, 3.62 (7.51 - 3.89), gives a target of: 0.27 (3.89 - 3.62), a sign that you should stay clear of this stock.
|The long-term support line, AB, drawn as a parallel to the resistance line CD, does show support which the share actually found at "B'" and on an oversold RSI indicator-- nothing that shouts out, "Hey - buy me!"|
But then, when you look at the volume, a different picture forms. Every time the price falls, it falls on falling volume, a sign of strength. Secondly, after the price reaches a certain "low" level, it suddenly rises (see red arrows) and on very strong volume. Soon after volume falls once again to below average, almost as if to say, "Thanks, I have my fill, and I am prepared to wait long-term."
|Graphic provided by: AdvancedGET.|
|At the moment, the price is falling once more and on falling volume after having risen very strongly on rising volume from $2.20 on the 26th of February, 2003 to $4.43 on March 14th. This retracement could be forming the handle of a cup and handle pattern as shown. This suggests that any movement above $4.35 would be a buy.|
|The upper target, should this occur, would be $4.35 - $2.20 = $2.15 + $4.35 = $6.50, which is close enough to the resistance line CD to be feasible.|
|My risk reward profile is as follows:|
Buying at $4.35 and using a 10% stop-loss signal gives me a stop-loss at $3.92, and a loss of $0.42 (4.35-3.92).
The calculated target is $6.50, with a profit of $2.15. This is greater than the 2.5:1 profit loss ratio I require (0.42 x 2.5 = 1.05).
|Address:||3256 West 24th Ave|
|Phone # for sales:||6042634214|
Click here for more information about our publications!