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My Charting Blog

It is interesting that I start off this Blog when the Singapore Stock Market is heading south. However, this makes it more interesting for me to write on as the market turned volatile. My interest is Technical Analysis, TA for short. I love to look at charts and predicting where they are heading. This blog is or me to record my thoughts on the market. The articles on this blog are based solely on my personal opinion on the charts that I read and readers should not take it as absolute.

9/20/2010

An example of market Euphoria

During the early days of my pursue of knowledge in the field of Technical analysis, my teacher ever told me of the 3 phases of movement.

When a chart starts to move, it begins with gradual 20-30 degree climb. This would be relatively dull and boring. As interests on the counter grow, its angle of assencion change to 45 degree. This is where demand equal supply. There is however a time when the climb turn steep to an angle of 60 degree. This is what he told me as market euphoria. It is at this point when people do not care, they will never think any alternative will be possible.

Sadly this is also the point where the bubble will burst any time. It will end with a sectacular display of fire works, huge volume with huge move. Before you know it, the chart will quickly descend.


Fig 1 Genting Daily Chart

Here, I am witnessing a market euphoria at work, people continues to predict how much higher it is going without the consideration of market reversal. The indicators are that the peak and have once defied a possibility of divergence. If this counter continues to go up, how far will it be going? Base on Fibonacci projection that I have placed in, target would be somewhere at 2.34.

But then I won't really dare to go in this one, it will be too late to do so anyway and it is not safe.

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