Change your perspective in a search for bias confirmation

I frequently write about perspective and how important it is when doing the work in chart review – to confirm or bring doubt – to an existing bias for a particular stock. This process of “changing the lens” should bring clarity to a stock chart’s price movement and the probability of where it is heading.

To illustrate this, I chose a random chart this morning during my chart review to show several different points of view on the recent price action. I will let you decide if it confirms a Bullish bias or not.

First up is a clean chart with no moving averages or trend lines drawn – only volume is shown:

GGC_cleanThe volume in 2013 sure looks like folks. want. in. wow.

Now let’s shake it up a bit by showing a perspective that causes me to pull off to the side of the road and actually read the map for directions – the Megaphone pattern:

GGC_MegaphoneNow back to feeling Bullish again, if only short term, with this perspective:

GGC_breakoutThis perspective may help further by showing 2 breakout back-test efforts that were bought quite nicely:

GGC_breakout_backtestsIt appears that from this point a trader can do a short-term trade to play for a breakout while swing traders may like a fade of this Megaphone pattern. Long term traders should be raising stops as they go or if into Options a Collar is appropriate here.

Your money, you decide.