You can see from the chart that the price action is heading towards a very important Fibonacci retracement level ( of the March 2003 to November 2007 swing)...the golden mean of 61.8%. This is creating a confluence zone with the 50% retracement level (of the November 1993 to November2007 swing), which W.D.Gann suggested was a very important level. This has created a "confluence zone" which is particular interest to me.
As a result of further analysis, I have noted the following "edges":-
1). The confluence zone can been seen to have been a significant area of resistance in the past(red zone)
2). The confluence zone has proved to be support twice in the more recent past (yellow zone with green circles)
2). The gold AB=CD shows the price action reacting to equal swings up.
3). The blue AB=CD gives a projection which should react at some point around the confluence zone.
4). The time taken from the low of November 1993 to the low of March 2003 was 113 bars. At the end of February 2012, the time taken is 108 bars. Is this the second 10 year cycle?....The difference between 113 bars and 108 bars is only 5 bars over a period of 221 bars which equates to 2.2% variance over a period of almost 20 years......that's pretty close in my book......and , of course, the nearer we get to 113 bars on the second cycle, the less the variance gets.
As ever, timing your entry is the difficult part. So, I watch and wait. However, given all of the above if the price action gets to the area of 290p, I will revisit my analysis and expect be a buyer for the long term.
Hello David
ReplyDeleteI look at charts more simplistically than you do.
For me there are three support levels for the Tesco price. 312p established on 16 Oct 2008 and confirmed 31 March 2009. 301p establish 24 October 2008 confirmed 9 march 2009 and 284p established 21 Novmber 2008.
The interesting thing about the 312p level is that it has acted as support three times recently, once in January and twice in February.
It has now risen just 2% over the last bounce on 22nd February. If it was me I would buy now with a stop loss at 310 (less than 4%) and a target of 366 (15%) or 380 (19.5%)i.e. I would not be in there for the long term. The thrill ride appears to have gone for this share.
I also note that the results are due on 18 April.
I tend not to stay in shares for the long term so my view is biased by that approach.
Hope that's helpful.
Paul
Hi Paul,
ReplyDeleteThank you for your constructive comments. I agree with the support points you make.
In this instance, I am looking to invest for my SIPP and as such am more interested in the income than the capital growth potential(although some of each is always nice). Therefore in this instance it is the support level that is important.
The major concern I have is with the massive monthly down bar that occurred in January as this possibly indicate further selling ahead.
I will watch the price action for a few more days as earnings approach and see what happens.
Regards
David