FOOD (Alliance Select Foods International, Inc.)

[lukie]

blik na ulit sa P2

[yeahbah]

61.8% / 78.6% PRZ at work

tuna.png (134.4 KiB) Viewed 669 times

[yeahbah]

TUNA is looking yummy. What do you guys think of buying between 1.5 and 1.58?

[jcptraders]

If it does reach 1.5 to 1.58 are you looking at a possible bearish butterfly?

[yeahbah]

I don't see any pattern. TUNA is steep decline and way oversold so I'm going to take advantage of 78.6-88.6% Retracement PRZ + Cycle indicator at bottom.

[WallStreet]

Hi, Yeahbah. I've been following some of your stock picks here and I am amazed at how the stocks have moved up, right on target. galing!! i got curious tuloy about Harmonic trading, have just started reading some materials on this. Its very interesting, and I was wondering if you could help clarify some questions in my mind:

a. I have the same view as jcptraders on TUNA.... i.e. a possible bearish butterfly pattern, with pt. X at 2.16 Dec. 13/09; pt A at 1.46 Feb 9, 2010, pt. B at 2.06 Feb 19, 2010 and pt. C possibly at 1.62 April 20, 2010. May I know your thoughts why you think this is not a potential pattern?

b. what are your warning signs that a pattern will not complete itself? If you have already established pts. X,A,B and C and pt. D is midway but seems to be hesitating to reach target, when do you sell? what will invalidate the pattern?

Thanks in advance.

[harley]

yes, i thought you were also trading a potential bearish butterfly

[betheone]

Pts X and A as indicated by wallstreet was the CD leg of the bullish gartley that yeahbah traded a couple of months ago. I'm not sure if you can link gartley patterns like that, meaning the end of one pattern is the start of another.

[yeahbah]

Hi, Yeahbah. I've been following some of your stock picks here and I am amazed at how the stocks have moved up, right on target. galing!! i got curious tuloy about Harmonic trading, have just started reading some materials on this. Its very interesting, and I was wondering if you could help clarify some questions in my mind:

a. I have the same view as jcptraders on TUNA.... i.e. a possible bearish butterfly pattern, with pt. X at 2.16 Dec. 13/09; pt A at 1.46 Feb 9, 2010, pt. B at 2.06 Feb 19, 2010 and pt. C possibly at 1.62 April 20, 2010. May I know your thoughts why you think this is not a potential pattern?

b. what are your warning signs that a pattern will not complete itself? If you have already established pts. X,A,B and C and pt. D is midway but seems to be hesitating to reach target, when do you sell? what will invalidate the pattern?

Thanks in advance.

Awesome questions.

First of all, it's not a pattern until it is so always assume that it will not complete. Don't make yourself believe that the market will do what you want it to do. Potential patterns is certainly tradeable, I mean there's a lot of pesos to be made on the CD leg of TUNA right? But you will have to consider how far the D point is and you can't ignore resistance areas.

In the case of TUNA, the Potential Bearish Butterfly is big and take a look at the resistance line and compare it with our previous trade with FPH and PIP. In the case of FPH and PIP, I traded the resistance breakout not the potential pattern. I only used the potential pattern for target purposes.

We can take advantage of the steep decline / oversold state of TUNA. Considering also that it's within the 61.8%-78.6% PRZ, cycle indicator is at 8 bars to bottom and price action tells us that the last bar is bullish. I could actually call a buy on this one.

tuna.png (208.75 KiB) Viewed 465 times

Compared to FPH, there's a huge gap between the current price and resistance line. Take a look at how 61.8%-78.6% converges with the resistance line in TUNA. I would consider taking profits at that level or hold on and just manage the trade. If you hold on, you could wait for a higher low then place your trail stop just below it. So again, we're not trading the potential pattern, we'll just use that for target purposes if in case TUNA goes above the resistance line.

fph.png (200.88 KiB) Viewed 463 times

One way to confirm a target level is when two fib level converges. Take a look at PIP. It reversed exactly where I called it -- 2.7. The cycle indicator helped in validating the reversal points. Unfortunately, I sold too early he he. I have a +/-10 bar tolerance on the cycle indicator. PIP reversed when it's 2-3 bars after the peak of the cycle

pip.png (201.09 KiB) Viewed 464 times

b. what are your warning signs that a pattern will not complete itself? If you have already established pts. X,A,B and C and pt. D is midway but seems to be hesitating to reach target, when do you sell? what will invalidate the pattern?

I use the cycle indicator. That's what I did in FPH. FPH is not over yet though. I'm just protecting my profits. You can also use divergences in RSI, MACD, Stochs and whichever indicator you prefer.

If you're interested with the cycle highlighter indicator. It's free, just google it: Amibroker Cycle Highlighter. I use it confirm Harmonic Patterns. It's based on the study of cycles by JM Hurst.

[yeahbah]

Here take a look at how the cycle indicator confirmed the bearish butterfly on AGI

agi.png (228.93 KiB) Viewed 465 times