I just began studying tech analysis, and I was wondering at one point you should enter a long position when you come across a w formation. Specifically, I'm looking at TASR on a daily chart. Should one wait until it passes the 8.60 resistance? or is it best to buy now? By the way, this is for educational purposes only. I'm still a student and am simply preparing myself for a career in trading. Any feedback would be greatly appreciated! Thanks Elite Traders!
(1) Assuming that you believe a "W-formation" started in ~October-2006 at ~$10/share, you could wait for a breakout above $8.60 and hope that the market rallies up to $10 in order to complete the "W". (2) The other thing is that if you have a "feeling" about something happening, you have to be willing to trust your instincts and act on what you perceive without waiting for confirmation from other "indicators". (3) For now, get back to your New Haven dorm room and do your applied math homework.
============ CAL; TASR has probably found a yearly bottom, but there are plenty of better longs; 1 year chart =down 200dma =down 50 day moving average =down 20dma = down Personally wouldnt want to even try a long profit here; prefer bottom fishing in farm pond. Jack Schwager has good TA books at any large library Most of your ''w''TASR patterns are down past year; personally would find a better long than TASR. Wisdom is profitble to direct
Thanks for the replies! Nazzdak, my "feeling" is that TASR is an altogether bad investment, but the chart provided a good illustration for my particular question. I figured that one should wait until the 8.60 level is reached, but the last book I read on TA was ambiguous on that point. What are your feelings on NTRI (M formation, 1-2 year chart), which looks to have reached the entry point that you suggest? The stock has been battered in recent weeks and, personally, I'd be hesitant to short the stock now. Are you suggesting that I embrace that feeling of hesitancy, or should I take the charts at face value? (Or perhaps I'm reading this chart all wrong.) Again, I'm not currently trading, but any input will go a long way in furthering my knowledge of TA. As per your third point, you're absolutely right. I do need to get back to my homework! Murray, Is there a particular book that you have in mind? I've heard that Schwager's "Market Wizards" and "New Market Wizards" are must reads for any aspiring trader. I'll be reading them in the coming weeks (after midterms).
This isn't a good illustration for your particular question because this isn't a W. It's a coil, beginning 15 months ago. If you buy at or around 8.6, you'll still be within the coil. If you don't put these "patterns" in context, then you're more likely to interpret them incorrectly. LC