PERCfect Rectangular Breakout!

I have been watching PERC for quite a while, just last 2 weeks It has attempted to get out from it's rectagular pattern, but went back down again and stayed inside the rectangle for quite a little while.

With the aggresive movement of oil prices from the global market, I assumed to see price breakout from the pattern soon. I did a dangerous move! A no-no attitude for a technician, but I still did anyway. I took a position at 10.75 and 11.25, these prices are still inside the rectangular pattern, the correct buying point should be 12.00 after the breakout at 11.75. Good thing the oil prices continue to move up that PERC's price followed.

Let's look at PERC's pattern first. It was consolidating for about a year inside a PERCfect rectangle with the resistance of 11.75. The dancing of 50-day, 100-day, 200-day MAs with each other confirmed the perfect consolidation. That shows that the position I took was dangerous, the pattern might break the resistance at 11.75 or break the support at 9.0. This does not have specific direction, bullish or bearish.

PERC went up and closed to 13.25 on its breakout date, however last Tuesday, October 31, it pulled back to 12.00. Scary huh? Good thing there was no trading for 3 days.

Here is my action plan, watch the price to reach the target at 14.50. Sell if the sign of weakness after 14.50 is seen. Hold if the momentum is still good. Tolerable pullback after the TP is reached is only 14.00, if it goes below SELL! Before the target is reached, if price weakens and goes back inside the rectangle, sell at 11.50 a minimum profit.

Since it has pulled back last week and closed at 12, I think if it opens at that price on Monday, November 05, it is a good price to buy for a 14.50 target. But please please dont ever forget your stops!



By tradingbless at 2007-11-03