FGEN (First Gen Corporation)

[genkumag]

Trading idea: falling wedge. Buy on breakout. TP:11.50. Very important to only buy on breakout from resistance. Posted a similar pattern previously for MEG which turned out to be wrong. What I like about FGEN's FW is that it won't be coming off a Head & Shoulder pattern like the one we saw in MEG. Hehe.

Again, buy only on breakout. TP: 11.50

Would appreciate other thoughts and reads as well.

[sund3r]

as expected, looks cool.. spiderman!

yan lang comment ko

[genkumag]

as expected, looks cool.. spiderman!

yan lang comment ko

So what's your brilliant idea?

[sund3r]

wala talaga chief

sana nga magbounce, meron ako neto eh. pang odd lot lang, sa ngayon..

[dineshsbhatia]

FGEN

CMP (PHP): 9.20
20-dma: - 9.35
50-dma: - 9.77
200-dma: - 9.79

Respected Members and Dear Genkumag,

Good use of tools, yes it’s clearly visible that the stock price is moving within bullish wedge pattern, however I have few suggestions kindly correct me if I am wrong.

1. On daily charts, bulls are facing strong resistance by 20-day average consistently re-testing it form last eight days.

2. Short-term momentum indicator RSI has shown positive divergence with the stock price, also MACD is attempting to give a *Kiss of Life to the stock.

3. Weekly charts reflect contraction in distance between 20x50-wma suggesting negative sentiment building up in medium-term which is likely to push the stock downward. Momentum indicators RSI and MACD are in negative tone.

4. On weekly charts, the stock has entered into congestion zone between 50-week average placed at ~ PHP 9.72 and 38.2% retracement level (12.28 – 4.09) sited at ~ PHP 9.15.

5. A strong support is provided by 20-month moving average placed at ~ PHP 8.64, the average has acted as strong support for more than five months.

*Kiss of Life:- When MACD is in bullish rhythm and MACD nears its signal line and just touches or gives a negative crossover for a day or two and reverses back in positive tone it is know n as Kiss of Life, opposite of which is known as Kiss of Death.

Daily and Weekly chart

FGEN.jpg (189.58 KiB) Viewed 1364 times

Conclusion: - The stock is reflecting short-term strength due to bearish momentum tiring up on daily charts charts because of which we could see a minor pull-back; however we cannot ignore possible negative sentiments piling up which are reflected in medium-term charts. The stock is likely to find support at ~ PHP 8.50. I believe we should avoid entering this stock as after breaking wedge on the positive side it might create a trap and due to current market situation risk-reward is not favorable.

Thanks and Regards,

DB.

[genkumag]

Dear Dineshsbhatai,

Your analysis as usual is spot on. I must admit that the entire premise of the trading idea was based solely on the falling wedge pattern. That while I realized early on that multiple price points (admittedly, an understatement), whether based on moving averages or previous price congestions and high points, may possibly restrict price from rising, I was hoping that the following would be enough to invalidate these concerns.

(1) Anticipated crossover between the 9-day and 26-day moving averages with stock prices piercing through the 9-day MA and lifting it for the crossover on the breakout.

(2) Gradual build up in volume (albeit incremental, and less than previous volume averages), which come to think of it is not confirmatory of a falling wedge..

(3) Weekly RSI continue to hold above 40, but which again does not prove my point and may not be the case for long.

(4) Actually, there's no 4. FGEN on hindsight is a tough chart to defend given the evidences you provided. I simply did not dig deep enough after finding and getting excited by that pattern.

I'm curious though whether the points you raised would generally be the same ones to be made of all falling wedges given that moving averages would be behaving in roughly the same manner given the trend in prices? Curious. I have yet to see a successful falling wedge pattern in Philippine stocks.

Again, thanks for sharing your thoughts and I look forward to reading more of your chart analysis in the future.

Rgds.

Genkumag

[genkumag]

I guess it was a falling (bullish) wedge after all...

[betheone]

Yep, looks like it Hope you were able to ride it.

[kropotkin15]

I guess it was a falling (bullish) wedge after all...

Actually if you look at the new chart, it seems to have materialized into an inverted head and shoulders pattern.

[genkumag]

I guess it was a falling (bullish) wedge after all...

Actually if you look at the new chart, it seems to have materialized into an inverted head and shoulders pattern.

Cool. But it still doesn't change the TP of 11.50 using your standard measure of H&S break from the neckline. It also would have meant profiting less given the late entry since you would have waited for the right shoulder to form and retrace before entering. Still, good eye. So for late comers, enter as close to the neckline, if possible.