4DS chart, page-3503

I’ve been reading all the 4DS posts on the Chart thread with some amusement.  All the Long Term Holders that are also Day Traders, but generally only when the SP is going up, and all the related emotive discussion regarding the hour by hour fluctuations in the SP.  I was wondering how much value all this blah, blah, blah is to the typical EOD Retail Investor/Trader.   I think we all know what the answer to that question is.  So I thought I’d post a chart with some observations that I think are relevant to the EOD Retail Trader.   See daily chart below.

 

 

 

Observations:

·        Volatility – Above the Volume panel I have the ATR% indicator.  This red line plots the 10 period ATR divided by the stock price. Note that the current ATR% is around 10. For 4DS this level of volatility is typical of the times in which significant upward price moves occur.  When the ATR% falls to the 5 level the general sentiment towards the stock appears to be that of disinterest with a slow downward price trend.  If you had a look at the ASX300 stocks you would find they would all, except a few, have an ATR% figure below about 4.

·        Momentum – The WT Momentum indicator is still moving higher and is not yet overbought. More significantly the longer time period/frame momentum indicator is moving up quite strongly.

·        Support/Resistance – Look at how well the High Volume Close levels, plotted on the price chart in green dots, identify these support and resistance levels.  For the next move up we need to see a strong Close above the 84c level.  I can almost guarantee that this next move up if and when it occurs will be associated with what the Market considers to be good news.  And this level also corresponds nicely with the Fib 50% retrace level of the fall from 13c to 4c, now that’s a surprise isn’t it (sarcasm?).

·        Trade Strategy – So we know that 4DS is a high volatility stock and that the Market is showing interest in this speculative stock when the ATR% indicator is around 10. This is good news for 4DS currently. We have a good view of current support and resistance levels and how the SP is likely to behave around those levels. As a Retail EOD Trader the next question I ask myself is how can I protect the capital I have allocated to this volatile speculative stock.  I’ve placed on the price chart what is called the “Traders ATR”.   It’s the thick black line on the chart that serves as a long and short trade trailing stop level.   It is based on the ATR.  The ATR setting for the above 4DS chart is one (1), i.e. the stop level is calculated using a one (1) ATR risk distance.   As you can see this trailing stop setting seems to work quite well for 4DS. This one (1) ATR setting is considered very aggressive.  A typical Retail Investor would probably use a setting of three (3) or even larger if trading on a weekly chart.

 

So the final takeaways from this analysis would be to not get too scared or upset with the current SP volatility, wait and watch for the next announcement to move the SP above the 8.4c level, protect you capital by using a protective stop level that takes into account the current measured volatility in the 4DS share price.

 

Good luck everyone. All IMO of course – wilf