GAMUDA Trade

I look for a few set-ups from my chart analysis to identify trading opportunities. I look for simple chart patterns - (1) Test of support (2) Pullback (3) Bottom reversal (4) Continuation patterns and (5) Squeeze - with a few technical indicators to support my analysis.

My trade set-ups generally have a good probability of working out but they do not give me positive outcome all the time.

GAMUDA Daily Chart on 20th Oct 09

On 19th Oct 09, I spotted a potential triangle pattern was developing on GAMUDA daily chart. I was expecting a breakout because the MACD downtrend line has been broken earlier, which provided a technical clue that the triangle upper line was likely to be broken soon. In addition, the Bollinger bands were tightening (not shown in chart), which is usually a prelude to a breakout move. The downside is the direction of the breakout could up or down - so setting stop-loss and proper position sizing is important.
You may notice a similar set up in mid Jul 09, which was followed by a strong upmove although the size of the triangle was smaller.
On the basis of these technical evidences, I decided to buy GAMUDA at 3.31 on 20th Oct 09. My stop-loss was at 3.12 (6% below my entry price) and my target at 3.84 (16% above my entry price).

GAMUDA Daily Chart on 29th Oct 09

As it turned out, GAMUDA did not breakout to the upside as I expected. There was a false breakout on 23rd Oct 09 but after that GAMUDA has been sliding downhill. On 29th Oct 09, GAMUDA dropped below its triangle lower line. I decided to cut loss when my stop-loss level at 3.12 was touched just in case GAMUDA price dropped even further. I exited at an average price of 3.125 for a 6.77% loss. The overall loss to my trading account value was, however, minimal - just slightly above 1%

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.