One of the company that I have been following is EDC or Energy Development Corporation. And in this post I wanna share my own Technical Analysis (TA). I used in my TA the following tools:
- Stock Chart by COL Financial
- Candle Stick graph
- Fibonacci Retracements
- 10 SMA
- 30 EMA
- 200 SMA
- Moving Average Convergence & Divergence
- Relative Strength Index
If you haven’t still memorize how those above tools functions, you may check back on these related topics:
As you can notice I started to plot my Fibonacci Retracements on somewhere in April 2014. My reason for this is very simple, it is in this period that the 10 SMA and 30 EMA stayed above the 200 SMA and also the start of the “Bull Run” for this stock. Also if you are that observant, you will notice that most significant movements occurred in the Fibonacci Retracements lines. And the latest movement in the right most part of the chart is the stock price is retracing to the 50% retacement line for the 3rd time thus testing its Support Level.
Short Term Consolidation
The first time it reaches the 50% it bounced back and reached the 38.2% retracement line and for the 2nd time it falls back to 50% and then it moves back to 38.2% and then again back to 50%. Thus I labelled it as short term consolidation, the sellers and buyers has yet to decide on what trend they will go will it be Uptrend or continue its Downtrend?
Interest of a certain stock can be measured through its Volume, the higher the volume means the higher the interest and the lower the volume the lesser the interest of the market participants on a particular stock. In this case with EDC volume has been decreasing since it started its downtrend on May 2014. And for me this is the best way to accumulate more shares since it has been neglected by the market that is why I put a check mark on its volume chart.
Moving Average Convergence & Divergence
As indicated in the MACD graph, it is already near the Zero (0) line. Most traders are looking into this indicator since a break on the zero area will trigger them to buy EDC shares since it will indicate an upward trend. But as of this time an attempt to pass above zero has been stopped for a while thus I’m putting an exclamation mark on this indicator to excite myself. LOL
Relative Strength Index (RSI) indicator for EDC indicates that its shares has been oversold since it is already at around 30. This means that EDC shares are undervalued and I consider it with a check mark to indicate that buying some shares is already on a GO.
Therefore I conclude that base on my own technical analysis, EDC must not to go down from its Fibonacci Retracement of 50% to 61.8% in order not to break its support level @ around Php 7.11. For it to move upward, it needs to break it support level at 38.2% retracement line or @ around Php 7.7 on its stock price.
P.S. This technical analysis is for personal purposes only and does not authorized anyone to follow all that has been discussed in this post. Personal research of each stock still best recommended in choosing your favorite company to invest or trade.