I have a thought about Paladin in the present consolidation it is experiencing and a particular phenomenon that may become a part of this consolidation...
I don't have a crystal ball, and I don't have a name for the phenomenon, but I will mention the attributes of this phenomenon so that you can be aware of the possibility.
This is a "could be play" because in reality, Paladin is still in a big picture downtrend. The up move we are experiencing potentially could be the first part of a major reversal. Until TA shows a revese, this is Bottom picking 101. The Bottom we are testing in the big picture is $1.40. The present high target for this intermediary up wave is about $3.50. There is room for the move easily observed in any technical analysis done. A weekly study is where this breaks down or so it seems.
In a weekly study, the upper bollinger is a touch point we are almost touching {bearish in a ranging or down trend assessment) but in a weekly study, and relative to the high in a weekly study, this down move is very oversold. An upper bollinger touch is usually bearish in most cases, but in this case not necessarily bearish..., it's just that in a weekly, we can have swings of more than a dollar quite easily in some cases up into many dollars, so the weekly is not a place to try and trade from when it comes to positioning. In this case there is potential for the phenomenon.
In the middle of all this is the phenomenon, which, short term, is related to the 11,000,000 million share churn a few days ago. This may be the trigger for the action described below. It was a pretty decisive top churn. This is positioning 101.
All that selling got rid of a lot of resistance, and the sellers would like to position themselves for a bounce. They will be using most likely a basic charting technique to spot the buy in. In this case it will show up as a lower bollinger touch. The lower bollinger touch (is bullish in an up trend) may play out just as planned in this medium term uptrend and the lower bollinger touch is being demonstrated in the PDN.TO chart series listed in:
StockCharts Public Chart List
However, the churn sellers were a determined bunch and will/may not be buyers until there is what they consider a good spread for the swing out and as we wasted a lot of bulls on this churn at $2.90, so it may be, that the bounce may well overshoot our preliminary target of $2.30 (we are presently playing a buy the dip strategy for an uptrend lower bollinger touch), and turn into a break through, or, what I call a lower bollinger skid. This lower bollinger skid is a great opportunity for positioning in one of the Big picture swings looking for the big bottom.
One thing about a lower bollinger skid is it's a guess as to where the bounce will take place, as a lower bollinger skid is very unpredictable in the sense that you may not want to predict a target, yet on the flip side it is very chartable. If the momentum builds, a lower bollinger skid can be a wild ride.
It will be unsettling if a lower bollinger skid takes place, but there is a silver lining.
With the major resistance removed at $2.90 or little left, if and when the next (bounce) buy in actually takes place, assuming we experience a lower bollinger skid moving below $2.30, it is possible that the resulting bounce (run) will finally make it through that resistance at $2.90
Huh? "What is that"? you say..
This action described is a common occurrence on stocks that are destined to break out.
There could be more than one occurrence, but each one is manageable.
It is the final dip before the big breakout disguised as trend breakdown. I have seen this final dip before the big breakout many times.
Be very alert for the possibility.
If such a scenario plays out, it will have some awesome potential for a great play. I personally am very alert for this potential. I know I'd be a buyer when the signal appears.
TA is not about predicting, it is about knowing where you are, and reacting properly.
GLTA Lostoutwest
Kenuck SmallCap Trader
StockCharts Public Chart List
Please read our Complete Disclosure
No comments:
Post a Comment