Weekly ASX Update: Automotive Holdings Group Limited (AHE.AX) |
By, James A. Hyerczyk
Automotive Holdings Group Limited recently ran into a wall of resistance near 1.91, triggering a gap to the downside and a subsequent break through the support line of a triangle chart pattern on the 60-minute chart. The size of the last candlestick suggests strong momentum that should lead to a near-term test of the Autochartist forecast price zone at 1.81 to 1.76.
The overall quality of the chart pattern is rated 6-bars. The initial trend which measures the strength of the trend prior to the chart pattern formation is rated the maximum 10-bars. The uniformity indicator looks for equidistant tops and bottoms as well as measuring the number of successful tests of support and resistance. It is rated an average 5-bars. The clarity rating looks for price “spikes” and “gaps” that can cause a disruption in the flow of the chart pattern. This is important to traders because these patterns can repeat, adding additional risk to a trade. The clarity rating is a below average 4-bars meaning traders should watch for disjointed movement at times.
The triangle chart pattern is a non-trending pattern. The gradual narrowing of support and resistance suggest impending volatility. This was proved when the market broke through the support level with a breakout rating of the maximum 10-bars. If downside momentum continues, traders should anticipate a quick move into the Autochartist target zone. Since this move relies on volatility and momentum, a stop loss order slightly above the breakout level is suggested to avoid getting caught in a change in investor sentiment.
About the author: Autochartist
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