Solo Oil (LSE:SOLO) shares have
shrugged off bearish threats and have started going up. This development is not
in isolation (there are other bull markets), because a stock rarely moves in
isolation from other stocks. Buying a
bullish breakout in this type of market is one way of making money. Ultimately,
this would be in conjunction with some other safe trading techniques. Becoming acquainted with the winning trading techniques
is worth the effort.
Technical Forecast
The chart
representing Solo Oil was in a serious and protracted bearish mode. For this
prediction, the Average Directional Movement Index (ADX) period 14 and the Moving
Average Convergence Divergence (MACD) default parameters are used. On September
7, 2012, the market reached a bottom at 0.305 and found it impossible to go
lower. In this kind of scenario, one would not take a rash action, since one
did not know which way the price would go. Since early September, the ADX and
the MACD were gradually forming a Convergence Pattern, for the ADX DM+ has been
above its DM- counterpart and the MACD histogram is above the zero line as the
signal line neared the latter – something that shows a potential bullish reversal.
Since last week, the market has broken out in a significant bullish mode, going
up by hundreds of points. The ADX 14 is pointing towards the level 40 (showing
strong bullish pressure), while the DM+ is clearly above the DM-. The MACD histogram
and the signal lines are far above the zero line. The 2 indicators have formed
a Bullish Confirmation Pattern. This is a BUY signal, although it does not mean
there cannot be a pullback in the price.
The price closed
at 0.515 yesterday. The nearest accumulation zones are 0.400 and 0.300. The
nearest distribution zones are at 0.600 and 0.700; and are expected to be
breached northwards in due course. If any upper supply level (e.g. on a higher
time frame) poses an obstacle to the market move when a bullish push is on, the
force of that push could breach that supply level and help the price higher.
This is also true of a bear market considering demand zones, whereas if another
factor establishes the instrument’s tendency, significant bullish and bearish
forces may be experienced in the market.
Conclusion: Sometimes,
previous market patterns could be an unreliable yardstick for tomorrow’s
prognosis. The Solo Oil is journeying towards the north. Though it was formerly
a seemingly hopeless stock, it now has a ray of hope.
This
article is ended with the quote below:
“…In addition
to all the standard mistakes which every experienced trader should know (no
stop-losses and so on) there is one mistake that many traders make but is not
too well known: Many traders know too much about the fundamentals of the
company they trade and therefore they cannot follow their technical trading
rules. But the latter determine the risk/reward-ratio and their drawdowns and
it is the first priority to control them. If you do not follow technical
trading rules you will trade
emotionally and that may cost a lot of money.” – Harry Boxer
NB: You would be exposed to
world-class, cutting-edge, and top-notch trading experiences here: www.advfn.com
Azeez Mustapha
Market Analyst, Trading Signals Provider and Coach
Copyright (C) ADVFN PLC
For more articles, go to: http://www.advfn.com/newspaper/authors/azeez-mustapha
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