Score:
The most important criteria for calculating score for this type of trading opportunity are wether the break up happens relatively quickly after the break down, wether the volume development is positive and wether the price is near the support in the ceiling of the formation. In addition the quality of the formation and the direction of the trend is taken into account.
Buying price:
The ceiling of the formation is calculated as the line between the tops in the two shoulders in a head-and-shoulder formation, as the line between the two tops in a double-top formation and as the resistance line in a rectangle formation. A buy signal is given when this ceiling is broken, and the buying price is set from the ceiling and a little up (about 20% of the height of the formation).
Price target:
Is set to 90-125% of the price target from the formation break.
Stop loss:
Is set to 20% of the formation's heigth under the ceiling of the formation.
Time horizon:
>From 40% to 80% of the formation's length.
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The content provided by Investtech.com is NOT SEC or FSA regulated and is therefore not intended for US or UK consumers.
Investtech guarantees neither the entirety nor accuracy of the analyses. Any consequent exposure related to the advice / signals which emerge in the analyses is completely and entirely at the investors own expense and risk. Investtech is not responsible for any loss, either directly or indirectly, which arises as a result of the use of Investtechs analyses. Details of any arising conflicts of interest will always appear in the investment recommendations. Further information about Investtechs analyses can be found here disclaimer.
The content provided by Investtech.com is NOT SEC or FSA regulated and is therefore not intended for US or UK consumers.