Hi everyone,
Last Thursday, I posted details of a potential “M” reversal set up coinciding with the 200 day moving average resistance.
The set up did not trigger last week but is potentially back in play now.
The set up would be triggered by a weak close today. I’ve outlined details on the chart below
The chart is China Life (Hong Kong Stock Exchange 2628). You can access details of the set up in my original post via the link below
http://blog.cmcmarkets.com.au/2012/02/02/bollinger-band-and-moving-average-set-up/
As you can see on the chart below, we now have the potential of a confirmed trend peak below the upper Bollinger Band. A standard approach here would be to enter on a close below yesterday’s low.
However, given that the support of the 200 day moving average (green line) is also at about the same level, traders may prefer to enter only on a close below the moving average.
As before, there is still the possibility of a set up below the upper band even if it does not trigger here and drifts a little higher
China Life - Daily. Source: Bloomberg
Cheers
Ric
what is the profit target and stop loss level you mentioned in your last post?
Hi Robert,
If there is a set up one approach would be to place the initial stop just above the latest trend peak. This could be moved down behind any new corrective trend peaks if a downtrend emerges. An approach to profit objectives would be to use a test of the support line under the large triangle pattern as an initial objective
Cheers
Ric