Reversal Chart Patterns
Trading stocks education - Trading tactics & examples
Head & Shoulders Top Reversal
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Head and Shoulders top pattern is a rally to a new high and weakness to intermediate support, a second rally to a higher high and decline to support, followed by a modest third rally and decline through support.
The technical target is derived by subtracting the difference between the highest level achieved in the formation of the " head" and the level of the " neckline" from the new breakout level.
As its name implies, the head and shoulders reversal pattern is made up of a left shoulder, head, right shoulder, and neckline. Other parts playing a role in the pattern are volume, the breakout, price target and support turned resistance.
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- Prior Trend: Without a prior uptrend to reverse, there cannot be a head and shoulders reversal pattern, or any reversal pattern for that matter.
- Left Shoulder: While in an uptrend, the left shoulder forms a peak that marks the high point of the current trend. After making this peak, a decline ensues to complete the formation of the shoulder (1). The low of the decline usually remains above the trendline, keeping the uptrend intact.
- Head: From the low of the left shoulder, an advance begins that exceeds the previous high and marks the top of the head. After peaking, the low of the subsequent decline marks the second point of the neckline (2). The low of the decline usually breaks the uptrend line, putting the uptrend in jeopardy.
- Right Shoulder: The advance from the low of the head forms the right shoulder. This peak is lower than the head (a lower high) and usually in line with the high of the left shoulder. While symmetry is preferred, sometimes the shoulders can be out of whack. The decline from the peak of the right shoulder should break the neckline.
- Neckline: The neckline forms by connecting low points 1 and 2. Low point 1 marks the end of the left shoulder and the beginning of the head. Low point 2 marks the end of the head and the beginning of the right shoulder. Depending on the relationship between the two low points, the neckline can slope up, slope down or be horizontal. The slope of the neckline will affect the pattern's degree of bearishness: a downward slope is more bearish than an upward slope. Sometimes more than one low point can be used to form the neckline.
- Volume: As the head and shoulders pattern unfolds, volume plays an important role in confirmation. Volume can be measured as an indicator (OBV, Chaikin Money Flow) or simply by analyzing volume levels. Ideally, but not always, volume during the advance of the left shoulder should be higher than during the advance of the head. This decrease in volume along with new highs that form the head serve as a warning sign. The next warning sign comes when volume increases on the decline from the peak of the head. Final confirmation comes when volume further increases during the decline of the right shoulder.
- Neckline Break: The head and shoulders pattern is not complete and uptrend is not reversed until neckline support is broken. Ideally, this should also occur in a convincing manner with an expansion in volume. Support Turned Resistance: Once support is broken, it is common for this same support level to turn into resistance. Sometimes, but certainly not always, the price will return to the support break, and offer a second chance to sell.
- Price Target: After breaking neckline support, the projected price decline is found by measuring the distance from the neckline to the top of the head. This distance is then subtracted from the neckline to reach a price target. Any price target should serve as a rough guide, and other factors should be considered as well. These factors might include previous support levels, Fibonacci retracements, or long-term moving averages.
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Continuation Chart Patterns
Trading stocks education - Trading tactics & examples
Symmetrical triangle is a rally to a relative new high, a pullback to an intermediate term support level, a second rally that does not exceed the recent high, a second decline that falls short of the intermediate term support level followed by a breakout on strong volume above the trend lines created by joining the new high and the secondary high.
Technical targets for symmetrical triangles are derived by adding the largest vertical height of the triangle to the ultimate breakout level.
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There are instances when symmetrical triangles mark important trend reversals, but they more often mark a continuation of the current trend. Regardless of the nature of the pattern, continuation or reversal, the direction of the next major move can only be determined after a valid breakout.
- Trend: In order to qualify as a continuation pattern, an established trend should exist. The trend should be at least a few months old and the symmetrical triangle marks a consolidation period before continuing after the breakout.
- Four (4) Points: At least 2 points are required to form a trend line and two trend lines are required to form a symmetrical triangle. Therefore, a minimum of 4 points are required to begin considering a formation as a symmetrical triangle. The second high (4) should be lower than the first (2) and the upper line should slope down. The second low (3) should be higher than the first (1) and the lower line should slope up. Ideally, the pattern will form with 6 points (3 on each side) before a breakout occurs.
- Volume: As the symmetrical triangle extends and the trading range contracts, volume should start to diminish. This refers to the quiet before the storm, or the tightening consolidation before the breakout.
- Duration: The symmetrical triangle can extend for a few weeks or many months. If the pattern is less than 3 weeks, it is usually considered a pennant. Typically, the time duration is about 3 months.
- Breakout Time Frame: The ideal breakout point occurs 1/2 to 3/4 of the way through the pattern's development or time-span. The time-span of the pattern can be measured from the apex (convergence of upper and lower lines) back to the beginning of the lower trend line (base). A break before the 1/2 way point might be premature and a break too close to the apex may be insignificant. After all, as the apex approaches, a breakout must occur sometime.
- Breakout Direction: The future direction of the breakout can only be determined after the break has occurred. Sound obvious enough, but attempting to guess the direction of the breakout can be dangerous. Even though a continuation pattern is supposed to breakout in the direction of the long-term trend, this is not always the case.
- Breakout Confirmation: For a break to be considered valid, it should be on a closing basis. Some traders apply a price (3% break) or time (sustained for 3 days) filter to confirm validity. The breakout should occur with an expansion in volume, especially on upside breakouts.
- Return to Apex: After the breakout (up or down), the apex can turn into future support or resistance. The price sometimes returns to the apex or a support/resistance level around the breakout before resuming in the direction of the breakout.
- Price Target: There are two methods to estimate the extent of the move after the breakout. First, the widest distance of the symmetrical triangle can be measured and applied to the breakout point. Second, a trend line can be drawn parallel to the pattern's trend line that slopes (up or down) in the direction of the break. The extension of this line will mark a potential breakout target.
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1st August 2013 Earning Report.. ...
Stay tune for updates... ...
Sembcorp Marine ST: further upside.
Update on supports and resistances.
Pivot: 4.15
Our preference: Long positions above 4.15 with targets @ 4.7 & 4.85 in extension.
Alternative scenario: Below 4.15 look for further downside with 3.8 & 3.6 as targets.
Comment: the next resistances are at 4.7 and then at 4.85.
Key levels
5.15
4.85
4.7
4.47 last
4.15
3.8
3.6
Copyright 1999 - 2013 TRADING CENTRAL
Sembcorp Marine ‘pleased’ with PPL court outcome
Singapore: Singaporean shipyard Sembcorp Marine said today it was pleased with the Court of Appeal’s decisions in its long fought case against PPL Holdings for outright control of PPL Shipyard (PPLS).
The Court of Appeal in its judgment today ruled that certain provisions in the joint venture agreement between Sembcorp Marine and PPL Holdings premised on equal shareholding no longer applied when Sembcorp Marine increased its shareholding from 50% to 85% in PPLS. The Court of Appeal, however, did not agree that Sembcorp Marine had the right to terminate the joint venture agreement.
PPL Holdings’ claim to the right to appoint the managing director was dismissed entirely.
“Sembcorp Marine is pleased with the outcome,” the shipyard group said in a release. “Arising from the favourable decision of the Court of Appeal, Sembcorp Marine will have complete control of [the] PPLS board.”
The Court of Appeal has awarded Sembcorp Marine 90% of its costs of its appeal and 90% of its costs before the High Court earlier on. [26/07/13]
Rectangle Continuation
Rectangle is a rally to a relative new high, pullback to an intermediate support level, a second rally to test the new high, a second pullback to intermediate support, a third rally to test the new high level followed by an upside breakout on strong volume.
The technical target for a rectangle is derived by adding the point difference between top#1 and the reaction low to the new breakout level.
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Rectangles are sometimes referred to as trading ranges, consolidation zones or congestion areas.
- Trend: To qualify as a continuation pattern, a prior trend should exist. Ideally, the trend should be a few months old and not too mature. The more mature the trend, the less chance that the pattern marks a continuation.
- Four (4) Points: At least two equivalent reaction highs are required to form the upper resistance line and two equivalent reaction lows to form the lower support line. They do not have to be exactly equal, but should be within a reasonable proximity. Although not a prerequisite, it is preferable that the highs and lows alternate.
- Volume: As opposed to the symmetrical triangle, rectangles do not exhibit standard volume patterns. Sometimes volume will decline as the pattern develops. Other times volume will gyrate as the prices bounce between support and resistance. Rarely will volume increase as the pattern matures. If volume declines, it is best to look for an expansion on the breakout for confirmation. If volume gyrates, it is best to assess which movements (advances to resistance or declines to support) are receiving the most volume. This type of volume assessment could offer an indication on the direction of the future breakout.
- Duration: Rectangles can extend for a few weeks or many months. If the pattern is less than 3 weeks, it is usually considered a flag, also a continuation pattern. Ideally, rectangles will develop over a 3-month period. Generally, the longer the pattern, the more significant the breakout. A 3-month pattern might be expected to fulfill its breakout projection. However, a 6-month pattern might be expected to exceed its breakout target.
- Breakout Direction: The direction of the next significant move can only be determined after the breakout has occurred. As with the symmetrical triangle, rectangles are neutral patterns that are dependent on the direction of the future breakout. Volume patterns can sometimes offer clues, but there is no confirmation until an actual break above resistance or break below support.
- Breakout Confirmation: For a breakout to be considered valid, it should be on a closing basis. Some traders apply a filter to price (3%), time (3 days) or volume (expansion) for confirmation.
- Return to Breakout: A basic tenet of technical analysis is that broken support turns into potential resistance and visa versa. After a break above resistance (below support), there is sometimes a return to test this newfound support level (resistance level). (For more detail, see this article on support and resistance.) A return to or near the original breakout level can offer a second chance to participate.
- Target: The estimated move is found by measuring the height of the rectangle and applying it to the breakout.
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Conventional offshore rig builders (SembMarine & KepCorp) will be affected by shale gas revolution. Oil may drop to below $70 from current $100/bbl. Very risky to invest in offshore rig stocks if conventional offshore rigs become obsolete.Source: BT 24.7.13 Singapore prepares for shale impactLower energy costs a boon, but some industries may see competitiveness eroded
The shale revolution is transforming the US economy, and it could soon make its impact felt in Singapore.A stronger US economy and lower energy costs would benefit Singapore, and a future hike in shale exports may tie in well with the Republic's ambitions to be a liquefied natural gas (LNG) trading hub. But the petrochemical, logistics and other industries serving oil and gas players will be keeping a close watch on how shale-driven tectonic shifts in the world's energy supply would alter their global competitiveness.
Shale gas production has soared in the US over the last five years, thanks to wider deployment of hydraulic fracturing technology, or fracking, to tap the unconventional source of gas trapped in impermeable shale rock.
The shale boom has lowered US domestic energy costs relative to Europe and Asia, and is credited with spurring the renaissance in US manufacturing. Natural gas there now sells for a fifth of the price it carries in Asia.
That picture of US economic strength is a positive one for the global economy and thus externally-oriented Singapore, said economist Manu Bhaskaran of Centennial Asia Advisors.
More than 9 per cent of Singapore's total non-oil domestic exports headed to the US last year, making it the third most important export-destination for Singapore. As Capital Economics' analysts noted, concerns that US manufacturing renaissance could hurt Asia's economies are overblown. Much of Singapore's exports to the US are intermediate goods and exporters here may well benefit from higher US demand for inputs.
New sources of energy will also be a plus for Singapore, a net energy importer and destined to stay one, given that diversity is likely to offer energy security and more favourable pricing.
The US's shift from being an importer of natural gas to a potentially significant exporter throws up " interesting opportunities for consumers like Singapore" , as Minister in the Prime Minister's Office and Second Minister for Trade & Industry and Home Affairs S Iswaran noted at an energy conference in April.
" We are beginning to see Asian LNG importers negotiating for more attractive terms, or certainly differentiated terms, whether it's in terms of index diversification, shorter contract terms, and also more competitive pricing," he said.
In a consultation paper on Singapore's LNG import framework last month, the Energy Market Authority said that the framework ought to " keep future options open and allow domestic gas buyers to benefit from opportunities . . . such as the emergence of new gas supplies and movements in gas prices" .
" If we are open and flexible, so that we can take advantage of pricing changes and diversity, and not get locked into long contracts, the better these developments will be for us," said Tilak K Doshi, head of the energy economics division at the National University of Singapore's Energy Studies Institute.
Progress in shale production in this region - especially in China and Australia - could float Singapore's ambition of being an LNG hub too. The first LNG terminal here started operations on Jurong Island in May with the stated aim of anchoring both physical and financial LNG trading, break-bulk services and bunkering here.
Also being debated is the potential impact on Singapore's key petrochemicals industry.
The US petrochemical sector has been a key beneficiary of increased shale gas production. The revival of activity and investment in crackers was thanks to a bountiful supply of shale, a less expensive feedstock than refined oil products such as naphta, which currently go into Singapore's liquid crackers.
" If these American companies can sit on cheap gas and build and produce there, Singapore will become less competitive," said Dr Doshi.
But taking a longer-term view, the Economic Development Board's director of energy and chemicals Eugene Leong said that liquid crackers here remain important to meet the growing demand for higher olefin products.
" Liquid crackers and shale gas crackers produce different products, and Singapore has been attracting chemicals projects requiring higher olefin feedstock," he said. Examples of higher olefin products include synthetic rubbers made by Asahi Kasei, Lanxess, Sumitomo Chemicals and Zeon - companies which recently invested in Singapore. " The competitiveness of our energy and chemicals industry goes beyond feedstock,"
Chemicals plants here are closely integrated with liquids crackers, which are in turn integrated with a strong refining base.
And even if the cost of raw materials is higher here than in the US, Singapore's established logistics infrastructure and proximity to rapidly growing Asian markets have kept its total costs competitive, he said.
Frost and Sullivan's consulting director for its chemicals, materials and food practice Amit Bajpayee agrees that proximity to Asia's surging demand is key. It is thus more important, in his view, for Singapore's petrochemical sector to ensure that it is the " least cost-inefficient" in the region.
After all, its loss of competitiveness relative to shale gas crackers in the US will be shared by Asian peers, as Ogan Kose, managing director of Accenture Trading, Investments and Optimisation Strategy, pointed out. " The only way to counter-balance it is for shale gas to be developed in Asia as cheaply as it is in the US. China would be a good example, and they may be able to reduce the production costs if they don't have to spend too much on environmental concerns," he said.
In fact, shale's larger and longer-term impact on Singapore may fall more heavily on its position as a transport and logistics hub rather than on its petrochemical sector, said Joergen Oestrom Moeller, research fellow at the Institute of Southeast Asian Studies. " The world has built up a fantastic logistics transport network with tankers, oil and gas ports and terminals" but shale gas will change this radically in the next 10 years and beyond, he noted. As more shale gas is uncovered right where demand for energy is greatest - in the US, China, Russia, India and Europe - gas will be transported via pipelines on land rather than by ships.
Also likely to be affected in the longer term is Singapore's production of offshore rigs to support the drilling of conventional oil and gas wells, Dr Moeller said. The potential decrease in conventional exploration may shift demand away from these players. Major rig builder Keppel Corp has said it will monitor the growth of shale oil and gas and evaluate how it could respond to the development.
krisluke ( Date: 25-Jul-2013 15:26) Posted:
Support : $4.49
7 days ema support: $4.507
20 days sma support: $4.43
Resistance : $4.54/5
upper bollinger band: $4.60
Range : $4.46 - $4.55 |
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Banks Raise Bar On Loans To China Shipyards As Beijing Targets Overcapacity
Banks have tightened lending to Chinese shipyards, putting more pressure on an industry that is already suffering from sluggish demand and a supply glut, as Beijing tries to cut excess capacity across a range of sectors.
The financing squeeze is set to hit less established yards, but could strengthen bigger players such as Yangzijiang Shipbuilding Holdings and South Korean rivals.
Some banks have started asking for more prudent ship construction contracts before they grant loans and have withdrawn loan approval rights given previously to branches, industry and banking sources told Reuters.
They are asking the yards to get clients to put upfront payments of at least 15 percent now in order to get loans, said an executive at a large Chinese shipyard, who did not want to be identified as he was not authorised to speak to the media. Some yards had offered generous terms to shippers, requiring payments upfront of as low as 1 percent.
In some cases the banks are also cutting credit lines and moving to recover outstanding loans, said the China Association of the National Shipbuilding Industry.
“As the shipbuilding market remains depressed, banks and other financial institutions have listed shipbuilding as a key industry for credit control,” the association said in a comment on its website posted on 18 July 2013.
An executive at a private shipyard in eastern China said banks had demanded yards charge as much as 30 percent in upfront payments from their clients. State-owned shipbuilders, though, could get easier credit terms, the executive added.
The bank measures come as China’s cabinet said this month it would cut off credit to force consolidation in industries plagued with overcapacity. This was shortly after China Rongsheng Heavy Industries Group, the country’s largest private shipbuilder, fell into financial turmoil.
Beijing did not specify then the industries it had in mind, though in 2009 it named nine, including shipbuilding. Industry sources said neither the banking regulator nor any central government agency had issued new rules on tightening lending to shipyards or other industries.
China rivals South Korea as the world’s top shipbuilder, though the ships built in China are mostly of lower value and less complex technologically. This has forced Chinese yards to compete on price and financing terms for orders that have slowed to a trickle since the global financial crisis.
At the end of May, the order book of Chinese yards stood at US$68.5 billion, second to South Korea’s US$102.5 billion, even though China’s order book in tonnage terms exceeded South Korea’s, data from Clarkson Research Services showed.
“The goal is to gradually cut down the credit but not to kill all of them at one go,” said a banking source, who did not want to be named due to the sensitivity of the matter. “As the economy is not doing well, banks aren’t willing to lend as much anyway.”
The size of outstanding loans at shipyards is unclear, but many banks are involved in handing out these loans, including top commercial banks such as Industrial and Commercial Bank of China (ICBC), China Construction Bank, Agricultural Bank of China, Bank of China and Bank of Communications.
ICBC declined to comment on lending to shipyards when contacted by Reuters. Other banks could not be reached immediately.
Delayed Payments To Staff And Suppliers
Total profit from the 1,647 Chinese shipyards, whose core business revenue exceeded Rmb20 million, slumped 29.1 percent on the year to Rmb28.8 billion (US$4.69 billion) in the first 11 months of 2012, according to industry association data.
“Affected by banks’ restriction on loans, shipyards are facing tight working capital and difficulty in purchasing raw materials and equipment, which results in increasing phenomenon of delayed payment to suppliers and staff,” the association said.
But the Export-Import Bank of China (Ex-Im Bank), a policy bank and an active player in shipping finance, said it had not changed its criteria for funding ship construction recently.
“We will continue to support qualified clients,” said Chen Bin, deputy general manager of the bank’s transport finance department.
Ex-Im Bank had about US$13 billion in outstanding shipping loans in May, up 30 percent from the end of 2011, Chen said earlier this year.
Despite China Rongsheng’s troubles, large and financially sound yards in China, as well as yards with a good track record outside China, are expected to benefit, analysts said.
“It depends on the conditions at your shipyard. Well-run companies don’t have any problem,” said Ren Yuanlin, chairman of Yangzijiang, when asked if the company has facing tightening credit.
Singapore-listed Yangzijiang has won new orders worth US$1 billion so far this year.
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