A CHARTISTS PRICE GUIDE FOR NON-CHARTISTS.

OMH - 26.75p .. it almost qualifies for my '25p-37.50p theory', which I haven't mentioned for a long time.

A couple of years ago, I was desperately seeking stocks that had risen to between 20.00p - 25.00p for the first time in at least 12 mths, and had then spent at least a couple of months consolidating within that range.

I had a 'theory' which was based on my 25.00p 'Major Key Level intervals', and the fact that breakouts are usually very strong, with their next target being the 'mid point' level above .. which in the case of the 25.00p breakout, would be at 37.50p .. offering a potential 50% rise .. the largest percentage rise of any 'Major Key Level'.

In post 342, dated 18th Jan 2004, I identified SRTS as one of those that met all the criteria, and made a prediction that upon the 25.00p breakout, it would keep going up to the 37.50p level, and I added its daily movement chart to the header post, so that it could be monitored on a daily basis .. thankfully it exceeded expectations.

... here is post 342 which included a few examples of my 'theory'.
.. to view the entire post, please use the scrollbar.

fingers xxd - 18 Jan'04 - 02:54 - 342 of 3798

SRTS - 24.5p - SURFACE TECHNOLOGY .. if we start with the 'bad news', and that is .. I don't think it will breakout at this time .. the 25p 'resistance' is strong, and it has risen too far to break through and hold. The indicators are high and suggesting a reversal downwards, which would indicate a negative period, and on top of all that, volume is low.

If it does succeed in moving above 25p in the next couple of days, then I wouldn't expect it to rise much further, before becoming trapped by the 25p level, where it would have to spend quite a bit of time, whilst it builds up enough strength to break free .. all this would change if the volume was to suddenly start increasing dramatically, high volume, produces strong moves.



.. and now for the 'good news' .. its looking as though it may be considering going for my '25p theory', and if it does, then I will get quite excited .. it doesn't take much to get me excited nowadays !!

My 'theory' has only been tested once, and it worked a treat .. so what is this theory ..

Well, its all based around the 'price guide', and is completely dependant upon the accuracy of the RANGES and MAJOR KEY LEVELS that I have identified.

The 'crossover' level from any range, into the range above, is always going to be a strong 'resistance' level, but the 25p 'crossover' level, is an even greater resistance than most, as I have identified it as a MAJOR KEY LEVEL.

For a rising price, the classic way to overcome this strong 'resistance', is to 'consolidate' just below the 25p level, until it has built up enough strength to propel itself straight through the 'resistance', and to rise sharply away from its influence .. my 'theory' is, that the strength needed to break through the 25p 'resistance', will carry the price straight up through the 25-35p range, and will probably not stop until it reaches the next MAJOR KEY LEVEL above .. which is at 37.5p .. a potential rise of 50% .. and no other level in the price guide, offers such a large percentage rise.

PET was in such a position back in December, and in 'post 95', I detailed my 'theory', and gave the 37.5p target upon a breakout.

The chart below shows what happened .. in just 4 x days, it went past my target, and almost reached the top of the 35-45p range. Since then, it has retraced, and is settling around the 37.5p MAJOR KEY LEVEL.



edit .. AFD is another recent strong riser that supports this 'theory', and again take note of the increase in volume at the time of the breakout, which is needed to produce the very strong sharp movement ..



SRTS has also been 'consolidating' in preparation for the breakout, and for a much longer period, and its recent moves, has taken it into the ideal position to launch the attack ..



I'm now going to make a prediction .. I reckon the chart indicators will begin to fall, and during this period, it will consolidate further between 22.5p and 25p.

As the indicators begin to show signs of 'reversing upwards again', the price will achieve the breakout .. and, provided this is accompanied by an increase in volume, the price will follow in the footsteps of PET, and will quickly rise towards the target level of 37.5p.

The 'streaming chart' below has been added to the 'quick scan' box in the header for easy reference .. I hasten to add that this theory has only been tested once before .. these are just my personal thoughts, and not a recommendation to buy .. I do not hold, and it is an unbiased view.

UPDATE: I'm afraid I was a little bit out, cos a couple of weeks later the price went flying up through the 37.50p level, and didn't stop until reaching 52.50p :-)

..... Anyway, enough 'waffling' ... wot about OMH !!

OMH - 26.75 .. it has been consolidating for about 6 x weeks within the 20.00p - 25.00p range, at levels not seen for about 6 mths, so the time periods are a little short for my 'theory' .. however, it has made a very strong breakout move today, with very good volume, so it may have the potential .. everything depends upon increasing volume to add to the momentum .. the big test will be around the 30.00p level .. those that do not have sufficient strength are usually halted around that level .. whilst a 'close' above 30.00p would be a good signal.

I will be following its progress very closely during the next week .. thanks for highlighting it just at the right time.