Based from the latest chart of MEG, I think we are possibly seeing the swing bottom of the stock already. It may possibly go down a little lower than the green support line. But the bottom line here is MEG's already at a bargain at this level. It also was able to touch the 200 Moving Average where most Institutions will also start to buy MEG. Fundamentally analyzing, MEG has a very good financial track records.
Figure 2. Other technical Indicators
RSI is near the oversold area of a downtrending stock.
Stochastic is also at the oversold area and is about to trigger a buy signal for MEG.
MACD is pointing down. An indication that MEG is still downtrending. But take note MACD is a lagging indicator, therefore RSI and Stochastic will first going to trigger the buy signal before MACD does.
Looking deeper to MEG's chart, for the past months, it was able to form the head and shoulder pattern. If you are going to short MEG the computed TP for bears would be approximately 1.28. This is the area where we can experienced very big selling pressure from those foreign brokerage. Once they are done it would be the bulls turn once again.
As for now if you are looking for a much safer entry wait for the MACD to flatten out and start to point upward before buying.
Hi Sir, paowiee here from the TP forum. Thanks for your analysis. In the first chart, what chart price or volume pattern formed within the boxed area for you to conclude that accumulation by institutions? :) Just curious to find out :) and also i want to eventually be able to tell whether there is accumulation or distribution by said institutional funds :D
ReplyDeleteHello paowiee,
ReplyDeleteTechnically speaking I was able to see a clear divergence between my indicator and the price direction inside the box. I also monitored closely the behavior of the different institutions during that time.
In reality upon the breakdown of the head and shoulder neckline, many foreign brokerages started to buy(accumulate)this for an opportunity to short the stock. After a couple of days, there is this one breakout candle an indication that the bulls are also getting aggressive on buying MEG. The followings days after the breakout a tag of war happened between the bulls and the bears which causes MEG to enter extreme consolidation until it breakdown last week. That is why as much as possible I avoid trading extremely consolidated stocks unless momentum is in the direction of the bulls.