Week two - how am I tracking?

 Week 2 - how's the trade going?

OK, so let's see how we're doing with that initial trade we had with Kirkland Lake Gold.

So to recap, we have $20k to spend, and the first tranche of that was spent on 100 Kirkland shares at $52.69 so a sum total of $5,269.

Right, there's a fair few things going on with this chart so I'll step you through them to make it all clear.  The very last green bar on the right just above the diagonal blue line shows the price gain over the last week. I bought KLA at 52.69 and it's since gained $2.80 or 7.2%. That's reflected in that last green bar. I've included blue horizontal resistance lines in this chart. Resistance I'll come onto later but as the name suggests, this can potentially cause the price bar to bump its head and come down. On this occasion, it burst through this zone and is on its way to resistance zones 2 and 3. The verticle red and green bars below the chart reflect volume i.e. quantity of shares in this stock people are buying. Green means buying, red means selling. So 5 weeks ago, we had one of the highest buying weeks for over 2 years. This is a good sign. People want to own this stock.

Relative Strength Indicator (RSI) 

The pink box has the RSI indicator. This is useful for identifying when stocks are overbought versus oversold and can give you a good indication of when to buy or sell. Looking at the chart, back in July, the RSI line was approaching the top of the channel indicating people have been piling into this stock. Not a great time to buy. Low and behold, down she comes and a year later the RSI is at the bottom of  the channel; a great time to buy. These are not 100% reliable signals as they can stay in that lower channel for long periods of time, but they are a help. The other signal, i.e. the price bar crossing over our blue trend line was the key signal signal to buy, however, the RSI is a nice addition to give you confidence in the trade. 

The RSI is pointing upwards and indicating price strength, however, it is heading rapidly towards the top of the channel predicting a local top and a temporary trend direction. In addition, resistance bars 2 and 3 are approaching so that could coincided with the RSI and trigger the decline in the share price of KLA. However, this is good news. This is where we can be patient, allow the price to retrace and double-down on our KLA investment. 

Price and time guess-work.

Assuming we peak out in the next few weeks, then it's a case of being patient and waiting for several weeks for the price to decline to a point where it's the right time to buy. My guess is we will rise ro about $60 in the next few weeks and then decline for several weeks into an early July bottom / buy zone I did place a cycle indicator on the chart which can help with the guess work but I can explain that another time. This helps predict the future, then the RSI will give another signal and then the shape of the price bar (candlestick) can give us another signal on top. More on those signals another time.