FKLI - Double-bottom Breakout (Dec 10)

Hi all.

Post-market analysis @ Dec 10, 2012

Today's furious breakout from 1,625 totally caught me off-guard.

The triggered stops managed to push price all the way up to 1,634.5, about 9-10points from b/o point, where the 50% (of 1,677-1.590 downtrend) fibo retracement line lies. 

My buy stop is triggered at 1,630 for my short at 1,625, although I initially put a tight stop of 1,628, meant to avoid being caught in a breakout, which happened.

For the day's price movement, I was expecting the completion of double-bottom by retesting the previous high of 1,625, follow by some slight pullback, before a breakout take place. 

However, all this happens within just the first 2hours of trading.

The bullishness was evident as the vital 1,625 resistance is broken, without hesitation, and the bulls managed to close the day on a nigh note. 

A look on the daily:

FKLI - Retraced 50% of 1,677-1,590 Downtrend (Dec 10)

Now that we have confirm a double-bottom breakout, let's look at how we can trade it.

After a double- or W-bottom breakout, price will most likely pullback to retest the neckline (highlighted by the pink box, chart below). 

If the neckline provides support, it will be a low-risk entry to Long for further upside.

If price pullback way below the neckline, this signals a false breakout, we can expect further downside, as the bears managed to take control by pushing down the price, amid such a classic reversal pattern.

On the hourly, both RSI & William %R indicators are well above their respective overbought levels.

MACD histogram is tracing downwards, signalling weakness in the late-afternoon rise before closing bell.

Price have been moving in up-channels. The immediate resistance comes in near the channel top & previous significant high of 1,635-40. Immediate support at 1,628 | 25 | 18-20

I'm expecting a repetition of the Nov 28-29 price movement, with a long white candle followed by a doji/small-bodied candle. 

Price might open near or slightly above today's close, travel higher to a form a higher high, then close around today's closing price.

After that, we might well see a pullback to retest the W-bottom neckline area.

FKLI - Double-bottom Breakout (Dec 10)

Based on the double-bottom pattern characteristics, a successful breakout will give a price target of minimum 1,640-60 (about 61.8-78.6% fibo retracement), taking the height of the lows to the neckline, & project it at the breakout point of  1,615-25.

However, for FKLI, we are in a retracement of the previous downtrend. As mentioned earlier, Wave C end-target based on Fibo projection is 1,625, followed by 1,635. 

As of close of 1,633.5, we are already near the projected retracement peak.

Hence, we will have to exercise extra caution if we are to hold Long positions.

Alright!

Happy Hunting!! :)