A rudimentaryobservation of the BHP chart shows the foundation of a bullish flag pattern under construction. However, more seasoned traders know that it is vital to have at least one indicator supporting the pattern development. We prefer to use the stochastic indicator. As outlined in my book, Simple Tactics, Profitable Trading (read a free sample chapter here), we know that there is a strong correlation between this indicator and the quality of breakouts.
Flag patterns are a breakout set up and without underlying momentum in the stock (as indicated by the stochastic indicator) the breakout is usually weak and there is even a chance that the breakout fails to eventuate. For this reason we would be holding off from buying BHP at the moment. Recent price action looks good, but it appears that the market as a whole, is not yet buying into BHP being valued much higher than$35 on the top side.
This book has been reviewed by Daryl Guppy and Alan Hull.
ABOUT THE BOOK, Daryl says:
"I think he (PAUL) has got some useful and interesting things to say. Thisisnew material and a good guide for new and existing traders."
ABOUT THE BOOK, Alan says:
"Hi Paul, just finished reading your book and I believe it to be a well written book with some very worthwhile insights - its engaging, anecdotal and reflects the fact that you are obviously well read yourself and an experienced trader/investor. I would recommend it to my students but I would place the caveat on it that it requires a degree of prerequisite knowledge and market experience."
Thanks Daryl and Alan.
Flag patterns are a breakout set up and without underlying momentum in the stock (as indicated by the stochastic indicator) the breakout is usually weak and there is even a chance that the breakout fails to eventuate. For this reason we would be holding off from buying BHP at the moment. Recent price action looks good, but it appears that the market as a whole, is not yet buying into BHP being valued much higher than$35 on the top side.
This book has been reviewed by Daryl Guppy and Alan Hull.
ABOUT THE BOOK, Daryl says:
"I think he (PAUL) has got some useful and interesting things to say. Thisisnew material and a good guide for new and existing traders."
ABOUT THE BOOK, Alan says:
"Hi Paul, just finished reading your book and I believe it to be a well written book with some very worthwhile insights - its engaging, anecdotal and reflects the fact that you are obviously well read yourself and an experienced trader/investor. I would recommend it to my students but I would place the caveat on it that it requires a degree of prerequisite knowledge and market experience."
Thanks Daryl and Alan.
