Jan 242014
 

Technical Chart Analysis Of  Moving Average Fake-Outs

 

CMCSA BIG PICTURE – MOVING AVERAGE FAKE-OUT

-Daily-Big-Picture-Moving-Average-Fake-Out

This is a daily chart of CMCSA (Comcast).

  1. It has been in a strong upwards trend for a long period.
  2. Price got into deeper pullbacks as accumulation took place.
  3. The steeper trend lines show that trend accelerated after the deep pullbacks.

CMCSA SMALL PICTURE – MOVING AVERAGE FAKE-OUT

CMCSA-Daily-Small-Picture-Moving-Average-Fake-Out

This is a close-up chart of CMCSA. To highlight the moving average fake-out trading setup, we plotted three moving averages (14, 30, 50).

(Learn: Moving Average Fake-out Trading Strategy)

  1. All three moving averages are sloping up. This indicates a bullish market bias.
  2. Prices tried to pullback but could only move sideways, implying a lack of bearish conviction.
  3. The current bar tested the 14-period moving average and gave a bullish fake-out signal. A recent trend line is supporting the current bar as well.

MOVING AVERAGE FAKE-OUT ANALYSIS

CMCSA is definitely trending up. While the trend is accelerating, there is no sign of trend exhaustion (for e.g. extreme volume).

In this bullish context, the pullback to the 14-period moving average presents a decent fake-out setup. If price exceeds the high of the setup bar, it will trigger a bullish fake-out trade.