I am by no means an expert at this business and my approach is not short term but more like mid to longer term.
My starting point is the Charts (TA) but I do check the Fundamentals to ascertain if there are risks that I can quickly discern e.g. Balance Sheet items such as Loans and also how the Revenue stream is tracking. It's quite easy for me to do this with a background in corporate accounting followed by corporate tax at the ATO. As a rule, I stay away from the Top 200, seldom venturing into the Top 300 but that's it, as the Liquidity isn't there and the level of disclosure cannot be relied on.
I'm attaching a chart for you to consider and to give a further insight into how I trade. I'm sure Master Jako will have a look at it and we'll benefit from his insights.
The chart that I'm attaching is the OFX - OZ Forex Daily.
Not so long ago Western Union showed an interest in taking OFX over, according to what I gathered, at $4- a share.
The CEO was replaced following some bad performance reports and this caused a Significant Event.
I purchased this stock at item 6. at $1.31 and intend to hold it mid to longer term.
As you trade Conditionally, as a suggestion, a Buy at $1.53 with a Stop at $1.46 might be a good entry; however I believe you need to monitor the Price movement and consider holding it for the mid to longer term as the Fundamentals appear quite strong.
Hope this help Beany - and your comments please Jako.
Here's the Chart and my running commentary:
1- Significant Event - change of CEO, following not so good reports. Please note the wide Spread and Large Volume but Support did come in and it Closed off its Lows;
2- the Price bounced back (as it normally does in this cases) and formed a Top - the Creek ?= Resistance;
3- Large Spread + Modest Volume = this could be the 1st Test; Supply still present but so is Support and it Closed off the bottom;
4- Fair Spread but Low Volume = Supply had a chance to overwhelm support but did not go on with it and formed a 2nd test ?;
5-Spring of Test - Price spiked down but found buyers (Support) who moved it up to Close at the previous bar's Close. I Bought the next day at $1.31. Technically perhaps a bit earlier but I'm a bit impulsive and need to learn Discipline;
6- Positive Bar = Good Spread + Low Volume; perhaps not ideal in terms of Intent but maybe good in terms of ease of movement; this was confirmed by the bars the following days; there's an upward movement present now;
7- After breaking out of the Creek (Resistance), we find a Small Spread but with Volume larger than the previous few days, indicating that there might still be Supply present and the effort v reward was not so good;
8- Supply had a chance to overwhelm support as we had a Large Spread on Low Volume but if failed to go on with it and the Price closed around the mid range of the bar.
Perhaps it is testing for the new Support Level at 1.475 - 1.48 - in line with the Creek.
If it holds and we get another test and/or spring, followed by a Bullish bar on Low (?) Volume, it may give a good signal to Enter the stock.
