InvestaDaily

All the way from Canada, let’s give a round of applause and congratulate our featured trader of the week @soservin07!

One of the key techniques in trading is learning to create a state of mind that is not affected by the market’s behavior as said by Mark Douglas. As an experienced trader in the market, @soservin07 reminds us to trade smartly and to do our own research before clicking the buy/sell button.

Just recently has @soservin07 given his in-depth thoughts about the market which has allowed us to obtain valuable information when trading.

About two weeks ago, our featured trader showed us his thoughts on $BTC, the top crypto coin in the market. With so much FUD going on on the market, many are still unsure on where this coin will go in the next couple of days. 

During this specific trading period, @soservin07 has plotted multiple technical indicators which would help him predict price actions for his trading plan. As we can see, he has included bollinger bands, parabolic SAR, multiple EMA’s, RSI and Stochastic RSI. He hopes that we would see signs for the next bullish cycle if it breaks 25k, but if it doesn’t, a 15k down to 14k would likely be the worst case scenario. As of today, $BTC is ranging around the 19k-20k levels. 

TECHNICALS OF THE TRADE

In terms of technicality, $BTC has hit a 52-Week Low of 17,614 indicating a strong support level around that area and a 52-Week High of 68,906.48. As we can see in his chart, he has plotted a “Tight Descending Wedge” indicating that a bullish cycle would be possible in the days to come. We may also notice in his chart that the price of $BTC is below most MA indicators he has plotted, indicating that prices are below average compared to the days before. RSI during that day was around 40-50 levels meaning it was neither overbought or oversold during that specific time period. However, as we look at its stochastic RSI, we may notice signs of reversal as a cross is seen to take in play. Volume levels are also seen to be slowly increasing compared to the previous weeks.

FUNDAMENTALS OF THE TRADE

Just recently, the CPI report has been released with inflation slowed to 8.3% in August. This has plunged almost, if not, every market in the world with BTC dropping almost 10% after the inflation report. With the global economy still on the verge of collapsing due to high interest rates and prices, trading BTC at the moment would not be the best option for most traders as FUD would cause them to pull their investments out. As of today, BTC has a total market cap of around 387 billion.

WHAT SHOULD BE MY NEXT MOVE

In the daily time frame, BTC is forming a descending triangle, which is often a bearish pattern. It is currently trading above $20k while maintaining the $19.8k support level. From here, we can anticipate a short-term bounce up to the $21.5k–$22k level, after which another rejection is possible.

Any daily closing below the $18k level will confirm the breakup of this descending triangle, which is a critical support level for BTC. After the breakdown, we may see levels between $12k and $13k.

Take note as well of the recent EMA Cross (10,20) which signals a bearish reversal for BTC. Prices are also seen to be below average in the last 20 days with its RSI around 40-50 indicating that it is neither oversold or overbought. 

With all the FUD on the market and the current global economic status, dollar cost averaging would most likely be your best option. Buying the dips with small percentages of your total capital would be a great strategy to slowly build up your portfolio, while at the same time, taking advantage of the economic status of the world.

When trading, always buy the fear and sell when everybody else is happy. As what @soservin07 said, always do your own research and trade smartly. Once again, KUDOS to @soservin07 for being this week’s featured trader! Enjoy your 14-day InvestaPrime Access and continue to be an inspiration to the trading community.

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An alpha way for charting technical analysis! Let’s give a round of applause and congratulate our featured trader of the week @alphatraderph!

Alexander Elder once said that “The goal of a successful trader is to make the best trades. Money is secondary.” In the case of @alphatraderph, he believes that an entry of trade using TA is a very must as it helps him to be more successful in terms of trading accuracy.

@alphatraderph has been a member of the Investagrams community since Aug 2018 and has been very active and sharing his trades recently. 

A couple of weeks ago, our featured trader posted his technical analysis on $VUL. A hot stock in the local market and a key player in the mining industry locally. $VUL recently broke its resistance at the 0.89-ish area.

(Sequence 1)

As the stock recently reached a 52-wk low at 0.76-ish area. @alphatraderph charted its support, volume, and resistance,  on the chart, bound for a breakout in its trendline as he believes in its technical analysis. @alphatraderph felt an opportunity to have a good entry near the support and HOLD for a while.

TECHNICALS OF THE TRADE

In sequence 1, our featured trader charted a cup and handle for a further breakout. Furthermore, $VUL broke its trendline at the 0.89 level and as of August 26, 2022, closed at 0.96. Thus, the stock recently reached the 0.98 area and is bound for a retest in the 0.89-0.92ish area. After breaking out at the 0.89 level, VUL’s volume surges along with MA. On the other hand, others are falling and consolidating. VUL is showing strength in terms of volume as it continues to retest after breaking out the resistance area. It came from a 52-wk low of 0.76ish before surging and breaking the 0.89ish and 0.93ish area, respectively. There could be a retest in the next few weeks for this stock to retest in the next resistance area at 1 PHP per share and above. Technically speaking next resistance of RRHI  is the 1 level onwards. Furthermore, VUL will retest whether it will break out at a 1 area or be back at the bearish side at 0.89-ish, 0.76-ish, and below area.

(Sequence 2)

@alphatraderph was confident that this stock would further go up as he charted a cup and handle indicator in which it is bound for a breakout or surge in the stock. He also charted that VUL will go up and will retest as he indicated support and resistance in the sequential posts he made. He charted a good entry near the 0.81 area. He is also observing the movement of VUL. Further to that, he is planning his trades carefully and aligning them with TA. 

FUNDAMENTAL CATALYST

VULCAN INDUSTRIAL AND MINING CORPORATION is a company that finds, develops, and produces oil and gas reserves and other mineral properties. The Company is also a participant in several service contracts, mineral production sharing agreements, and geophysical survey and exploration contracts entered with the Philippine Government, through the Department of Energy.

As of August 26, 2022, the VUL closed at 0.96. VUL remained speculative as it has a negative return on assets amounting to -476.97%. However, $VUL has been a trend recently, and the volume from the locals and foreigners is increasing. It is still unknown whether $VUL will rise further or fall back. However, the Philippine Government has recently been focusing on the new regime of fiscal policy for the mining sector. This will further be speculative depending on the fiscal policy that will be passed as law. Thus, it is best to observe $VUL and plan a good entry and exit as VUL and other mining stock companies will further be speculative. In addition, the Philippine Economy is expected to rely on the mining sector to further collect funds from this industry.

(SEC17Q 1Q2022, VulcanMining)

(Sequence 3)

WHAT SHOULD BE MY NEXT MOVE

As the stock recently breakout from 0.89, it would be wiser to observe and wait for what $VUL might do next before jumping in. This stock is speculative since the industry right now is a much more focused industry by the national government. In terms of trading, the demand from consumers is continually growing. However, it’s best to wait for a consolidation, pullback, or a good entry near its support for a better risk-to-reward ratio. It would also be advisable to trade lightly and in tranches given that we’re not yet out of the woods.

Once again, KUDOS to @alphatraderph for being this week’s featured trader! Enjoy your 14-day InvestaPrime Access and continue to be an inspiration to the trading community.

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Similar to how doctors have X-rays and MRIs, tools are also needed to navigate the markets. Among the different methods traders and investors can use, technical analysis is the technique not known to many of the masses. Despite this, it has still proven to be a powerful tool as many of the great traders across history have used it in their own unique ways.

What is technical analysis?

For those unaware, technical analysis is basically the study of price and volume in order to understand where prices might go in the future. Through the use of charts and indicators, traders and investors can assess what they need to do.

The beauty with technical analysis is that it lets traders creatively pinpoint how demand and supply will play out in the market. It might look intimidating at first, but reading and plotting charts out isn’t rocket science. You just need to learn the foundations and know how to apply them as your trading system progresses. However, as with all techniques there are some common mistakes that are often made. Here are some of them and how you can avoid them to really make the most out of your trades.

Common Technical Analysis mistakes

Using too many indicators

When people first employ Technical Analysis in their trading, most think of the same image: a chart full of lines and indicators. Often taken from media, people often have the idea that using charts require the use of complex drawings and the like. However, this is very far from the truth of what effective Technical Analysis looks like. When using Technical Analysis, you have to remember that indicators are only tools. In the end, you are the one that tries to identify what the market’s current situation is. Indicators only serve as helpers in helping you figure it out. 

For example, using a chart like the one shown might make you look cool to non-traders, but will it really help you? Professional traders often have two or three different indicators, but you need to realize that each one serves a purpose. Adding indicators should serve the purpose of making it easier for you to gain crucial information. If an indicator you added does little to help you analyze the market’s condition, then maybe its time to take it out. Remember: price is king and volume is queen. Indicators only exist to serve these two.. 

Not understanding the foundations of Technical Analysis

Somewhat related to the overuse of indicators, traders often fail to understand the foundations of Technical Analysis. Although the basic tennants are easy to learn, only a few master the concepts. It’s not uncommon for the basics to be rushed in order to go towards more exciting and advanced theories. While learning advanced concepts can be helpful, the basics will always serve as the foundation for progress. For example, if in the act of learning complex patterns you start to become unaware of supports and resistances, start thinking twice on how you should proceed. 

How basic a chart looks like doesn’t determine the potency to make a profit. In the end, its a better understanding of price action that allows traders to use charts to the fullest.

Lack of flexibility

Understanding patterns of behavior within the market is the core of technical analysis. In a sense, we go through the history of the markets in order to understand how it might move in the future. However, as Mark Twain famously said: “history doesn’t repeat itself, but it rhymes.” A common pitfall in using technical analysis is that traders think the market will react in the exact same way as before. Although the markets behave the same way even as time passes, patterns won’t exactly replicate one another. Flexibility is needed in order to adjust to the small changes that occur in how prices move. People often rely too much on the possibility of a pattern happening again in the exact same way. So much so that opportunities are lost, or trades fail.

In the example above, if a trader were to rely too much on the pattern that retracements occurred at the 100-day exponential moving average, then he or she would’ve missed the chance to make a profit on the latter rally. 

Biases

The problem with biases is straightforward. One example is when a trader starts to favor a stock above the rest, every signal starts to become bullish. There are many kinds of biases than the one mentioned above. Each one just as dangerous as the other. Having biases takes away a traders ability to objectively analyze the market. 

Take a look at the picture above. Are you bullish or bearish? Once you’ve made your choice, read the next line.

The chart shown above is the $PSEi weekly chart inverted upside down. Disregarding the color of the bars and looking only at how the chart has formed, can you still give the same answer before you found out? Different biases will incur different problems for traders. However, the generalized solution to solve biases is to become as objective as possible in your decision making process.

Ignoring macro conditions

Lastly, a fatal flaw that many encounter is failing to recognize macro conditions. Discounting macro events, many traders, especially beginners, fail to even chart indices as part of their planning process. Looking at the price action of individual stocks and other assets is important. However, you need to realize that how the broader market moves will impact the behavior of whatever your trading. Often times, extreme moves in the stock market index or other benchmarks will cause the strongest price action patterns to fail and even reverse the trend. 

At the very least, make sure that you’re always aware of how market benchmarks/indices are moving. They will help you determine if its time brace your portfolio for an upcoming sell-off. Of course, they will also let you know when its time to start aggressively buying your top picks. 

The journey ahead

In your trading journey, you will encounter many unique styles of trading. Each one often different in some way to another. Even if two traders use technical analysis and use the same indicators or patterns, nuances will still be spotted. The most important thing you need to remember is that you need to find a style of trading suitable for you. You need to establish your own understanding of the market that will help you create a process in making trading decisions. When you find one, make sure that you master it first rather than seeking other ways to trade. As the saying goes, “I fear not the man who has practiced 10,000 kicks one, but I fear the man who has practiced one kick 10,000 times.”

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Invest to build a better future and learn continuously to improve yourself.

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To join, simply:
1. Download Investa app
2. Complete application
3. Invest for as low as Php 1,000.00 to claim your 150 raffle tickets

You can invest as much as you want on or before September 9 and claim unlimited raffle tickets!

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Congratulations to @marketpainterph for being the featured trader of the week! 

@marketpainterph has been sharing his thoughts consistently in the Investa community ever since August 2020 and has been very active recently. 

A couple of weeks ago, our featured trader posted his technical analysis on $BDO, a hot stock in the local market and banking company led by the SM GROUP. $BDO was charted by @marketpainterph predicting that $BDO was bound for a breakout.

As the stock recently retested at around 110, @marketpainterph charted its support, volume,  resistance, trendline, and RSI on the chart. @marketpainterph felt an opportunity to have a good entry near the 1st wave at 110-112 area.

TECHNICALS OF THE TRADE

Technically, $BDO bottomed at 110 are which was also nears  its 52-wk low. After following the elliot wave prediction, it seems that the stock breakout at the 114-ish area, volume was still strong as BDO is one of the leader in the local stock market. BDO will now have to face resistances at the 130 and 135 levels as it tries to continue its uptrend. BDO is showing strength in terms of RSI, Volume, MA, and Net Foreign Buying (NFB). As per the prediction of the featured trader, it will consolidate first and retest before breaking out to 135+ level.

FUNDAMENTALS
BDO is led by the SY GROUP, a prominent family in the country and a diversified holdings firm focused on real estate, telecom service, banking, malls, and others. As such, the stock is heavily affected by how the financial market moves. Although interest rates remain high, the main driver for the stock right now seems to be the overall bullishness of the market as a whole. Given that BDO is the biggest bank company locally, it has a market capitalization of 559 Billion PHP. This stock is driven by the support of its parent company and the diverse businesses and affiliated with SM group.

WHAT SHOULD BE MY NEXT MOVE

Should BDO start to consolidate, a good resistance to break could be 132 as a lot of supply currently resides near that area. Once broken we could see BDO continue its rally.

As the stock continues to move, it may be wise to wait for a better entry point before putting on a trade. As always, make sure to adhere to your systems and set-ups even if the market is bullish. 

Once again, KUDOS to @marketpainterph for being this week’s featured trader! Enjoy your 14-day InvestaPrime Access and continue to be an inspiration to the trading community.

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Invest to build a better future and learn continuously to improve yourself.

Join our #InvestorDay 9.9 and get a chance to win LIFETIME ACCESS to our InvestaFest premium recorded videos and have the opportunity to learn straight from top traders, entrepreneurs, industry leaders in the country!

To join, simply:
1. Download Investa app
2. Complete application
3. Invest for as low as Php 1,000.00 to claim your 150 raffle tickets

You can invest as much as you want on or before September 9 and claim unlimited raffle tickets!

Invest today: http://invs.st/IVGWInvestorDay99Daily