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Let’s get technical 📈 Sharpfokus117
December 5th, 2019
⏰ 2 minute read
⏰ 2 minute read
Analysis?
Let’s get technical. Technical analysis the analysis of trading patterns & specifically chart patterns, looking for signals. Some dismiss it, but it’s also possible to see it (literally) as a great blend of science, psychology & reality. Above all it’s great fun, especially if you like to look at charts & draw connecting lines. Here’s the Sharpfokus technical view.
Wedge
Shoe?
One of the main technical patterns are called wedges. Just like shoes, cheese & cakes, they are literally... wedges. A wedge is a tool, a simple machine used to separate, as in ground & feet or make a portion as in cheese & cake. We can think of a trading price wedge as in stock or currency as a piece of trading separating the past from the future.
Narrows
The kind of wedges we are looking at most often involve something going sideways, but they can also go slightly down or slightly up. They’re usually a period of time where there’s no clear direction. As a result they most often go sideways & like a piece of cake or cheese they narrow towards a point.
Break
As mentioned, the technical trading wedge is normally a divide between what happened in the past & what’s going to happen in the future. If the wedge is declining, the future is normally up, if rising, down. Mostly the side ways wedge ends as it comes towards the point & the trading action continues in the same direction it was heading before the wedge ‘pause’.
Let’s get technical. Technical analysis the analysis of trading patterns & specifically chart patterns, looking for signals. Some dismiss it, but it’s also possible to see it (literally) as a great blend of science, psychology & reality. Above all it’s great fun, especially if you like to look at charts & draw connecting lines. Here’s the Sharpfokus technical view.
Wedge
Shoe?
One of the main technical patterns are called wedges. Just like shoes, cheese & cakes, they are literally... wedges. A wedge is a tool, a simple machine used to separate, as in ground & feet or make a portion as in cheese & cake. We can think of a trading price wedge as in stock or currency as a piece of trading separating the past from the future.
Narrows
The kind of wedges we are looking at most often involve something going sideways, but they can also go slightly down or slightly up. They’re usually a period of time where there’s no clear direction. As a result they most often go sideways & like a piece of cake or cheese they narrow towards a point.
Break
As mentioned, the technical trading wedge is normally a divide between what happened in the past & what’s going to happen in the future. If the wedge is declining, the future is normally up, if rising, down. Mostly the side ways wedge ends as it comes towards the point & the trading action continues in the same direction it was heading before the wedge ‘pause’.
Rupiah
Collapse
We’ve got 2 wedges for you. One is shorter term in nature, the other is longer term. The shorter or most recent one is the rupiah. The rupiah has fallen significantly in the last eight years. From just below 9,000 which seems ages ago, rhe rupiah declined at first slowly & then last year saw a fast move to 15,300.
50%
That rapid decline measure almost exactly 2,000 rupiah from 13,300 to 15,300. The rupiah has now strengthened by about 50% of that move or 1,000. That a price would reverse almost exactly half the move is amazingly common. What makes us feel positive in this case is that the recover is slightly on the positive side of 50% or to about 14,100.
Triangle
After recovering the (slightly more than) 50% , the rupiah has settled into a wedge shaped sideways pattern. The highest was 14,300 & the lowest about 13,900. This sideways pattern is getting close to its point. That means a breakout is coming. Our prediction is that, like normal, rhe rupiah will continue in the direction it went in to the wedge, which means stronger, below 14,000.
Collapse
We’ve got 2 wedges for you. One is shorter term in nature, the other is longer term. The shorter or most recent one is the rupiah. The rupiah has fallen significantly in the last eight years. From just below 9,000 which seems ages ago, rhe rupiah declined at first slowly & then last year saw a fast move to 15,300.
50%
That rapid decline measure almost exactly 2,000 rupiah from 13,300 to 15,300. The rupiah has now strengthened by about 50% of that move or 1,000. That a price would reverse almost exactly half the move is amazingly common. What makes us feel positive in this case is that the recover is slightly on the positive side of 50% or to about 14,100.
Triangle
After recovering the (slightly more than) 50% , the rupiah has settled into a wedge shaped sideways pattern. The highest was 14,300 & the lowest about 13,900. This sideways pattern is getting close to its point. That means a breakout is coming. Our prediction is that, like normal, rhe rupiah will continue in the direction it went in to the wedge, which means stronger, below 14,000.
JCI
6,000
The second technical pattern is in the JCI index. This one is longer as in it started longer ago. This means it’s likely to be more powerful later. I can remember well when the JCI was in the 600s. Now it’s in the 6,000s! But 6 is the famously unfinished number. 7 is much better, we should be moving into the 7,000s soon.
Sideways
I wasn’t here at the time, but it wasn’t long before I arrived that the JCI was at 60 in the late 1980s when I was leaving school. 60 to 600 to 6,000 sounds pretty good, but there should be much more to come! The JCI reached 6,000 early last year & since then it has been trading in a sideways wedge with 6,300 as the top & 5,700 the lowest, 6,000 in the middle.
Break
But wedges can’t go on forever, they reach a point & I think we’re reaching that point now. It’s time for the JCI to break out the same way it went in, up. A stronger rupiah could well be the catalyst. As mentioned, the longer the wedge goes on, the bigger the move will be when it breaks out. We are now at almost 2 years, which is quite long. It’s going to be a big rally.
False
There’s something else which makes us even more excited... markets love to trick investors into a panic before reversing. You sell, you lose. We have seen a number of stocks which are also in wedges recently break out the wrong way, ie down not up. But this is a fake & we can see now many of the are quickly reversing back up. These false breaks & rapid recoveries will also help to make the rally even stronger as investors have to panic back in.
Be a great investor!
Sebastian
6,000
The second technical pattern is in the JCI index. This one is longer as in it started longer ago. This means it’s likely to be more powerful later. I can remember well when the JCI was in the 600s. Now it’s in the 6,000s! But 6 is the famously unfinished number. 7 is much better, we should be moving into the 7,000s soon.
Sideways
I wasn’t here at the time, but it wasn’t long before I arrived that the JCI was at 60 in the late 1980s when I was leaving school. 60 to 600 to 6,000 sounds pretty good, but there should be much more to come! The JCI reached 6,000 early last year & since then it has been trading in a sideways wedge with 6,300 as the top & 5,700 the lowest, 6,000 in the middle.
Break
But wedges can’t go on forever, they reach a point & I think we’re reaching that point now. It’s time for the JCI to break out the same way it went in, up. A stronger rupiah could well be the catalyst. As mentioned, the longer the wedge goes on, the bigger the move will be when it breaks out. We are now at almost 2 years, which is quite long. It’s going to be a big rally.
False
There’s something else which makes us even more excited... markets love to trick investors into a panic before reversing. You sell, you lose. We have seen a number of stocks which are also in wedges recently break out the wrong way, ie down not up. But this is a fake & we can see now many of the are quickly reversing back up. These false breaks & rapid recoveries will also help to make the rally even stronger as investors have to panic back in.
Be a great investor!
Sebastian
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