To range trade BEL using Darvas boxes. Cut loss is set at the bottom box initially. Upon breakout, the top box of the previous box is the cut loss point. Price targets are adjusted based on box increments as each box top is breached. RSI and Fibonacci retracements are used to backup buy and sell decisions.
Reasons for putting on watchlist:
1) Price is located at the confluence of 100 SMA monthly, 61.8% fibo retracement, and bounced off 3.10, which is the 3 year low that occurred on September 2011 ( low of 3.08)
2) The price had been on iAOTS for 8 months, and a reversal is likely.
3) It had been consolidating within a box pattern, suggesting that the downward trend had been arrested
On July 13, the third day after touching bottom, I bought x shares at 3.22.
Reasons for buying
1) There was a bullish divergence that started on June 2, 2015.
2) Since bottoming at 3.10, the price rebounded above the 50 line of the box pattern at 3.18, and closed there for the last 3 days since July 9, 2015. The RRR was also favorable .
3) The RSI was also increasing , and the day after , it broke out of its box pattern.
Based on the 5 minute chart, BEL had already gone on AOTS. All these are good reasons to support my buy decision on BEL.
Here is my portfolio a day after I bought BEL:
What happened next:
Based on reverse fibo, there would be strong resistance at 3.50, 61.80% fibonacci.
Thus I was prepared to sell between 3.45 to 3.50.
After price surpassed the 3.40 initial target, I looked for bearish divergences or any other bearish signals and found none. Thus, I assumed the uptrend will continue. I computed for the increments and got the target price for the next box. Based on the bigger box, the target is at 3.80. I used trailing stop at 3.45 this time.
Reasons for selling:
1) The selling target of 3.80 had been reached.
2) Double TAP, a higher high resistance, followed by a red candle.
3) Weakening RSI.
Here is the result of my BEL trade.