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To say that Healthway Medical's uptrend broke down a few sessions ago is to state the obvious. The 20dMA is a support turned resistance at 16.5c. So, it makes sense to reduce exposure at resistance and to re-enter at support in such a situation. That time for selling at resistance has come and gone.
If you remember, I said I am waiting to see if the supports hold and to wait for a better time to add to my position. You might also remember that I said I look at 15c as an important XR support level and that I am almost sure that the 50dMA support at 14c would hold, if tested. A regular visitor to this blog, CL, asked if it would reach 13c which is where we find the 100dMA. This, I said, is possible but less probable.
Healthway Medical's price action formed a dragonfly doji to close at 15.5c today on even lower volume. The dragonfly doji is a bullish candlestick. It seems that the 15c support is not calling it quits and is holding up quite well. Added to this is the very low volume which confims that the sell down lacks conviction. MFI formed a higher low and has turned up. Watch the green line I have drawn beneath the MFI. We want to see the MFI forming higher lows for the price to move up convincingly.
Any move up in price would meet with initial resistance at 16.5c, the 20dMA. Breaking resistance at 16.5c could see the price testing the recent high of 18.5c, which is probably a strong resistance level. Breaking this would probably see the XR eventual target at 21.5c tested.
I drew a trendline in orange color on the price chart. Trendline resistance is at 15.5c. If price action breaks this line soon, it is good news for the bulls.
Strategy: 15c support is holding up, it seems. Entering at this level is quite safe since the next support level is only 1c away at 14c. Limited downside and a nice upside. I have put in my buy queues for tomorrow. Always hedge and don't be too greedy.
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10 comments:
Hi AK71,
Thanks for the above article and advice. I am looking to accumulate some fresh positions in Healthway Medical tomorrow. How can i hedge my positions - more specifically using what tools and measures to do so?
Please advice. =)
Hi,
Thanks for visiting my blog. How do I address you?
I am a firm believer in hedging and it is quite simple. You have total control and it does not cost you any money. It does not allow you to maximise profits but it allows you to reduce risk and still make money, well, hopefully.
In this case, if you have identified 15c as a strong support, admitting that there is a possible further downside, don't put all your money down at 15c. Maybe, just put down 30% of what you intend to invest. This is an arbitrary number, it could be 20% or 50%. It depends on how much risk you want to take. The idea is to reduce risk and not put down 100%! So, in case it does decline to 14c, you have money to put in, say, another 30%. Hope this explanation is clear. Good luck. :)
Hi AK71,
Many Thanks for the reply and kind advice. OOps, i did not leave my name behind in my earlier post. You can address me as KC. Good luck to us all! =)
KC
Hi KC,
No problem. Yes, good luck to us all and visit often. Have a good night. :)
Another important lesson learnt. :)but frankly for low investors like me who can only afford 20 to 30 lots the charges will factor in alot
Hi CL,
I used to always make it a point to buy or sell at least $8k in every transaction. This was just to max out the brokerage fee. I very kiasu one. Must get my money's worth mah. Hahaha... Then, a friend told me to consider the risks.
For example, if I only had $8k and I put it all down and if the share price dropped, I would cry. No more money to buy. Consider how much is the brokerage fee and how much is the opportunity cost. Food for thought? ;)
Hi AK 71,
I shared earlier that I sold all my 800 lots of mother share at 0.16 cts and arec holding on to 800 lots of rights now.
That lowered my cost by almost 8K.
Hope that your prediction will come true by end of this years.
Kingston
Hi Kingston,
I am happy that the little strategy saved you $8k. That is a lot of money. :)
Hope that we will all make more money as Healthway Medical's shareholders before the year is up. However, TA is dynamic. What is true today might not be true tomorrow. So, we have to stay vigilant.
Hi AK71,
Pardon me for my ignorances, but can I ask what is dMA? Casper here. Thanks
Hi Casper,
MA stands for moving average. dMA is a daily moving average and wMA stands for weekly moving average.
Thanks for visiting and come back often. :)
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