IPGP – Technical Analysis
IPGP currently is in up trend, it is in a Bull market stage (Latest stock price 76.34 is above long term (200 days) moving average (MA200 is 68.37). 50 day moving average is 70.12 and above 200 days moving average.). More than that, lately it’s been traded with well above average volume, it shows a lot of interest to this stock.
Yesterday (December 8th) was very interesting day because the trade volume was enormous – almost 6 mln shares vs usual volume of around 300k. And yet the price did not move much and on a candlestick chart I can see a doji – it looks like a cross. It signifies that no buyers and no sellers won, they are in a perfect balance. In other words, there is no decision of the short term direction has made as of yesterday. By the way, there is a short article available about candlestick chart (original text taken from Wikipedia):http://www.stock2own.com/StockMarket/Theory/TechnicalAnalysis/Candlestick-Chart
In terms of Technical Indicators Alert, it currently show “Hold”, because all indicators are currently in a positive territory. I think the “Buy” signal was on December 3rd, when price crossed up MA10 and MACD was finally giving the buy signal (started to form a “mountain”). At the same time RSI crossed above 50 level, which means stock started to perform better than usual.
Also, I’m usually trying to draw support/resistance lines and as far as I can see, there is a strong support line at the level of 75. When I switch chart to 1 year date range (just click on “1y” button at the top of the chart), I can see that the price was staying at the 75 level and could not get up pretty much all April. Recently, it tested 75 level again at the beginning of November and on December 3rd the price finally made it through. Because previous resistance line become new support, we can see that price sort of bouncing off this level ($75) for the last few days.
So, I think the good entry point for a long position was on December 3rd, when all indicators gave the “buy” signal and at price level of slightly above $75. It is very close to a support level, which usually a relatively safe entry point. Big volume confirmed the move up and the stock is trading in the uptrend since the middle of October. All moving averages are pointing up, all secondary indicators (stochastic, MACD, RSI) are in a positive territory – I would say it is ready to go up.
The next level of resistance is probably this year’s high of 79, therefore we can expect it to run to that level at least. I would definitely place a stop loss right under the current support level of $75, so if this analysis is wrong and stock goes down, broker will automatically close this position at that level. How far below $75 – it should be defined based on your own rules and risk tolerance…