As indicated in my prior comments on the blog, now is time to look for a potential trade. As I mentioned before, last Friday’s closing has many stocks sitting at or near a THD ATR (*). This means that the stock will either bounce from this point or will break its current support.
For example let’s look at FSLR. This stock, in 2011, traded at to a high of 175.45 and is now trading at 23.54. Last month there was well over 180 million stocks traded. This month, thus far, only 97 million shares have been traded. The monthly chart below shows that price has an overhead resistance right at 26.31, which coincides with the THD SR (*), yellow dot over last bar.
The weekly chart shows the stock range bound between the pivot high at $26.31 and the THD SR (*) at $19.68 for the past six weeks more or less. Now pay close attention to the red dot right below on the yellow arrow. This is the THD RSI (*). This indicator shows that there is support at this point and price may find it hard to go below it. Now remember, this is a weekly chart so we need to watch the chart this week to see what plays out.
The THD tools provided an early warning that the stock would pull back to THD ATR (*) on 10/18. Look at the divergence in volume (the blue volume bars at the highs). On 10/19 the stock retraced as expected and now we need to look for potential entries based on a lower time frame. We cannot ignore that price may pull back to the THD ATR (*) on the daily chart (THD ATR is the blue cross right below the last price bar). Last Friday the bar closed at $23.54 and the THD ATR is currently set at $21.28.
Whether you are going long or short you need to pay attention to the overhead resistance on the weekly and monthly charts. A conservative approach is to have price to break these areas first (resistance) and then long.
Additionally, the chart below shows the 60 minute chart on the right and a 90 minute chart on the left. The chart on the right shows that the 60 minute chart of FSLR has a potential THD ADX magenta peak (under the yellow arrow). And right above the yellow arrow, you see a green arrow showing a flat RSI meaning support.
The 90 minute chart (left side) shows the RSI is flat at the moment (yellow arrow), which could mean that price can pop to the upside from here. I will be on the lookout for an entry confirmation on the 5 to 15 minutes charts. I will be monitoring this stock and update the blog if and when an entry point appears.
Hope this explanation helps you understand how to trade under current market situation.
(*) These are THD indicators. If you want to know more about them please visit the THD website.