Everything about the BGU Chart says it’s been overdue for a little breather. Question is, is this the end of the bull run or just a temporary pause. Price, RSI, MACD, Slow Stochastic all confirm the pullback is in and today’s level is one of several possible entry points if you believe the climb higher will resume. Today’s bounce off the centerline average is encouraging now the confirmation tomorrow would be a nice addition to the move. Granted, a lower move towards the 50DMA would be a nice entry too but the market is still working out the “new norm” level so for now it remains to be seen. Indicators will finish up today not providing any confirmation to direction so it is in my best interest at this time to do nothing but await confirmation.
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Broader market support has collapsed and BGU is under it’s 200 DMA thus regardless of today move I would expect BGU to hit that $38 to $40 line very soon. If broader market support remains bearish I would expect BGU to hit $35.00 and draw a line in the sand there meaning if $35.00 does not hold you may see a fall all the way down to $25.
However, concerning broader market support the bears are not completely convinced in their move lower as you can see the continued downward move is on low volume with bull/bear ratios deteriorating so assuming Europe finds some intermediate solution to calm fears there is an underlying potential development for the market to reverse the downtrend in the next week or two.
The perfect entry would be on the weekly chart following the Slow Stochastic. Wait for the Slow Stochastic to drop below the 20 line and then reverse direction (cross over) with the %K and %D above the 20 line. Once the %K and %D are above that 20 Line that will be the low risk entry.
You can also make the same trade off the daily chart using the Slow Stochastic, obviously it will happen faster than the weekly but the same principals are at play. If you follow the Slow Stochastic backwards you can see the February 2010 move and the November 2009 move where both traded well for decent profit but you can also see the February fake move too where it turned up and then went right back down so make sure you keep a mental stop in mind and follow your trading plan.