Calpine needs a serious up day, and soon. We have now closed below our long term trendline six of the last eight days. Not by a huge margin, but in some trader�s books two consecutive closes below a trendline render it officially broken. The new trend could be sideways, it doesn�t have to be down, but the end of the up line is what I am more concerned with for the immediate future.
Other traders use a 3% rule. The line is not broken until we close 3% or more below the line. We have not yet done that.
The recent price action is also starting to shape up like a line hug, and for those of you who read the post on that, you know that it�s a better thing for bears than bulls.
There should still be support below at 4.90- however that is decidedly below the trendline and only of marginal consolation.
If you want to find a more bullish point of view, we could get more liberal with trendlines and ignore the low of Oct 9, 2002, instead employing the low of Oct 30. A minor change to the long term trendline, but that change makes the line unbroken, no matter what TA rules you use. However, without a nice up day soon, we are beginning to hug that line as well.
So no giant flashing red lights yet, but the warning signs are beginning to mount and situation is delicate.
If we move in for a closer view- the intraday charts. Friday afternoon broke a 7 day up trend on the 15 minute chart.
Let me stress that the charts are not indicating a change in sentiment yet, and no decision has been made, (so we have to assume up trend) but it is time to watch closely. Consider that any strong move from this narrow price range will see follow-though. Watch for the volume to increase- volume has been very low and a marked increase in activity will mark a genuine move.
If you break up TA indicators by their ability to predict price direction, there would naturally be three categories. Leading, lagging, and real-time indicators. Leading indicators would mostly be chart patterns, such as the ones in LU and JDSU we watched a few weeks ago predicting the drops in those charts. Moving averages would fall into the lagging indicator category, with the time scale determining how much lag time they suffer from. Trendlines are more real-time, you cannot predict �when� they will break, but look out once they do- it can be stunning how quickly a price will move after a trendline is broken.
So no giant flashing red lights yet, but the warning signs are beginning to mount and situation is delicate. ------------------ I'd say the lights are already flashing. But the "Take Shelter" sirens haven't gone off yet, and I'm sure hoping they don't.