Financials are sneaking up (Ichimoku breakout for FAS)

Dear Readers, the financial sector is moving higher. It looks like there could be a Ichimoku breakout for FAS on the cards. What is an Ichimoku beakout? A move out of the clouds would mean that a new trend is possibly in place. Traders using the Ichimoku Cloud system would start to accumulate/buy stocks that are breaking out of the Ichimoku Clouds as depicted in the Direxion Daily Financial Bull 3X ETF (FAS) chart below (click on chart to enlarge). Proper position sizing are used as one can never know if the breakout could be a failure and Ichimoku traders would add to or average up their holdings at even higher price as the stock price moves up. Scary isn't it? Its a mechanical trading style. Stop loss would be moved up to limit losses or to secure their profits.

Ichimoku Clouds is primarily a trend-following system. The rationale is to buy high as that means that the stock is showing strength and can only go higher from the buy point. A move out of the clouds would mean that a new trend is possibly in place. Some famous trend followers are Ed Seykota and John W Henry (current owner of Liverpool Football Club).

Next we look at everyone's favourite stock, Bank of America (BAC). BAC made a higher high and a higher low on its daily candlestick during trading on Thursday. It bounced off its support on a successful retest. This is a good area to accumulate long position as indicated in the Wyckoff method of technical analysis. We should see BAC moving higher from here.

Good luck to all !