Dear Readers, I was looking for signs of accumulation for the stock of Bank of Amercia (BAC) and decided to apply Richard Wyckoff's method of techinical analysis to the chart pattern of BAC.
BAC could possibly be at the stage where it is preparing to make the jump across the 'creek' a.k.a major resistance OR a failure to make the jump could see it coming down to the $6 or even $5-plus region for a retest of the support.
I came to know of Wyckoff's method of technical analysis when I came across "The Three Skills of Top Trading" by Hank Pruden whereby the Wyckoff schematics of accumulation and distribution were covered extensively by the author. Fantastic read! This book is a must read !
Abbreviations used:
Selling Climax (SC): the point at which widening spread and selling pressure (high volume) usually climaxes and panicky selling by public is absorbed by professional interest at prices near bottom.
Automatic Rally (AR): Relief rally where short-covering can easily cost prices to shoot up
Secondary Test (ST): A retest of the area of selling climax to test the supply and demand at these levels. For a bottom to be found, volume and price spread should be significantly diminished as market approaches
support.
Spring: Also known as a shakeout.
Sign of Strength (SOS): Advance on high volume and price spread
Last Point of Support (LPS): The ending point of a reaction or pullback where support was met, also known as a retest of support where long position can be initiated or to add to profitable ones.
Have a good weekend!
BAC could possibly be at the stage where it is preparing to make the jump across the 'creek' a.k.a major resistance OR a failure to make the jump could see it coming down to the $6 or even $5-plus region for a retest of the support.
I came to know of Wyckoff's method of technical analysis when I came across "The Three Skills of Top Trading" by Hank Pruden whereby the Wyckoff schematics of accumulation and distribution were covered extensively by the author. Fantastic read! This book is a must read !
Abbreviations used:
Selling Climax (SC): the point at which widening spread and selling pressure (high volume) usually climaxes and panicky selling by public is absorbed by professional interest at prices near bottom.
Automatic Rally (AR): Relief rally where short-covering can easily cost prices to shoot up
Secondary Test (ST): A retest of the area of selling climax to test the supply and demand at these levels. For a bottom to be found, volume and price spread should be significantly diminished as market approaches
support.
Spring: Also known as a shakeout.
Sign of Strength (SOS): Advance on high volume and price spread
Last Point of Support (LPS): The ending point of a reaction or pullback where support was met, also known as a retest of support where long position can be initiated or to add to profitable ones.
Have a good weekend!
No comments:
Post a Comment