Follow Us For The Latest Updates

Follow Us For The Latest Updates

Create An Edge for your trading

29th April 2020

Many have a misconception that trading is as good as gambling, as traders are betting their money on an unpredictable outcome. Yet, one thing that they do not know is in trading, a trader able to study and makes strategies to increase their winning edges. So, what is your winning edge in this trading game?

M+ Wiz can be your edge in trading if you able to learn, study and fully utilize the tool. In M+ Wiz, there are more than 10 rules which cover both bullish and bearish triggers. For beginners, it is recommended to focus and stick with a few rules first. One that we are going to cover in today’s post is Resistance – Breakout with High Volume.

Resistance Breakout with High Volume on ASTRO (6399), on 27th April 2020

Before going to that, below are some Simple Steps to Configure the Alert List based on own preferences:

1. Select Alert Settings

2. Decide on price range for alerts and Apply

Example of price range between RM0.20 until RM5.00. Only stocks within this price range will appears on Alert list.

3. Tick the preferred rules

All the bullish rules are ticked except for RSI buy rules (RSI Oversold – Cross below 30)

4. Save settings

Save the Alerts setting so that only the ticked rules appear every time when launches the M+ Wiz

Rules: Resistance – Breakout with High Volume

What is Resistance?

Resistance, or a resistance level, is the price point at which the rise in the price of an asset is halted by the emergence of a growing number of sellers who wish to sell at that price.

By Investopedia

It is quite logical to purchase a stock when the number of buyers have overtake the number of sellers who sold their shares at resistance level. However many encounter issues such as buying the resistance false break, or the momentum didn’t follow after the breakout. Here comes million dollars question: How to select a high probability resistance breakout?

One of the important criteria is the Volume Transacted. Volume represents the buying interests. When the price breakout happens without a strong volume, the buying interests can be weak thus lead to a weak momentum or even a false break. Therefore, our M+ Wiz’s trading rules have filtered on this aspect and only identify the Resistance Breakout with High Volume.

Both breakout came with a significantly higher volume in comparison to previous day.

Besides Volume Transacted, another criteria that increased the winning probability of breakout is Price Consolidation at resistance. If share price able to consolidate near the resistance level before the breakout, the breakout is likely to be genuine and strong. It convinces the market that the breakout is valid as buying interests is strong enough to keep the price consolidates at the resistance, rather than strong selling pressure rejection from resistance.

Example 1: ASTRO (6399)

Price has been consolidating near resistance before the breakout

Example 2: HEXZA (3298)

Circled shows the price stalled near the resistance before the breakout

Example 3: DUFU (7233)

Squared box shows the consolidation near the resistance level

Example 1: ASTRO illustrated a consolidation near resistance at RM0.88 area, and bullish signal came in amid the breakout with Marubozu bullish candle.

Example 2: HEXZA which is alerted earlier on [Trend] Support Rebound, made consolidation near resistance of RM0.845. Buying momentum kicked in as the breakout came in with high volume after the consolidation, spiked more than 5% within a day.

Example 3: DUFU has been consolidating at the resistance and had a false break earlier. Yet, the price continued to consolidate near resistance and made second attempts of breakout. This breakout stands a better winning probability due to a higher volume transacted which shown on Box 1 and Box 2.

 

Last but no least, the probability of winning will be increased if the entry comes amid the MACD is above center line. MACD indicates a positive momentum and trend when it is above the center line.

MACD is above center line, also known as zero-level

In summary, our trading entry for Resistance – Breakout with High Volume can have a higher probability if:-

  1. High volume transacted on breakout
  2. Price been consolidated near resistance before breakout
  3. MACD is above center line

Hopefully with these sharing, it helps and improves the winning rate and creates an edge in your trading! If you enjoy reading this, please like our post on FACEBOOK to encourage more similar postings in future!

Do LIKE & FOLLOW us on our FACEBOOK PAGE to get more updates and information!

Share:

Share on facebook
Share on twitter
Share on linkedin
Share on telegram

More Posts

technical focus

Technical Focus – KPOWER

Engages in sustainable energy and utilities business in relation to construction activities that are specialised engineering services and subsequently diversified into the healthcare and logistics business. Outstanding orderbook as of end-Feb 2021 at approximately RM1.60bn implies an orderbook-to-cover ratio of 16.7x against FY20 revenue of RM95.8m will sustain earnings over the next 3-4 years. Shortlisted for the development of Large Scale Solar (LSS4) programme with 50MW capacity will be able to generate recurring income for 21 years. Technically, the short-term consolidation breakout above RM1.96 may power price to target the next resistances at RM2.20-2.32 with long term target set at RM2.58.

market pulse

Still on the ascend

The FBM KLCI locked in third consecutive gains last Friday, as focus was shifted from glove counters to the telecommunication sector following Celcom-DiGi merger talks. Tracking the overnight improvement on Wall Street, the local bourse may trend on a slightly positive tone after hovering firmer above the critical 1,600 level. However, we believe the market sentiment will remain choppy amid rising Covid-19 cases (albeit the ongoing vaccine rollout plan for Covid-19), coupled with the development regarding the new wave of Covid-19 outbreak in some countries and Europe and Asia.

macquarie structured warrants 20200914

HSI-HGK dominates the warrants market

The Malaysia warrants market saw a total of RM233.3mil traded on the second week of April, which is 15.4% higher than RM202.1mil in the prior week. Out of which, the warrants over Malaysian underlyings were the largest contributor with RM167.4mil traded (71.8% to the total turnover) followed by warrants over the Hang Seng Index (HSI) with RM56.3mil traded (24.1% of total turnover) as the Hong Kong market was shut on Monday and Tuesday.

market pulse

Defending 1,600

The FBM KLCI posted mild gains yesterday as investors piled into glove heavyweights with the narrative of potential surge in demand for gloves amid the recent waves of Covid-19 outbreak in Europe and parts of Asia. Tracking the overnight gains on Wall Street, Nasdaq especially, we expect the positive sentiment to spill over to technology stocks on the local front. Commodities wise, the CPO prices saw a modest decline while the Brent oil price edged higher.

create-an-edge-for-your-trading-m-online