With this post, one of my long-term favorites, China Biologics (CBPO) has decisively broken out to new all-time highs.
Recall that I have been in and out of this stock and took profits at the older 423.2% line at about the 120 level. For a prior look at the FibLines, see my prior post here.
With this post, CBPO has sold off from the 120 level, then staged a come all the way to the old high at about 125, paused, hesitated, then finally broke out to a new all-time high.
The chart on the top left shows my new interpretation with wave 1 starting at 61.91 on 12/14/2014 and ending at 101.07 on 4/16/2015.
Based on that interpretation, we had a nice deflection off the of 161% line at about 125.24 which found support at the next lower orange line. Then it moved sideways for a week or so before heading out into new all-time high territory. Note however that the stock is currently sitting as resistance at the next higher level orange line. At this point, I will avoid a new long-side entry until we can get a pullback preferably to the 161% line in the 125 area.
This example shows how you can structure longer-term trading decisions around the FibLines:
- Gives you an overall sense of direction, up in this case
- Puts the price action into 1 of 4 categories (anywhere between 0, 100, 161.8, 261.8 and 423.6. In this case we have just exceeded 161.8 and waiting for a pullback to the breakout point at the 161.8.
- Prevents you from entering when the chart look absolutely fantastic which can sometimes be the worst possible time to act. I have made this mistake more than once.
Anyway, this new interpretation will be included in my next release of the FibLines indicator due out in early 2016.
Enjoy your holiday season.