For those retail investors, like myself, who prefer longer stays in stocks rather than quick ins and outs, a weekly chart over a 5 year term provides an essential longer-term perspective in addition to the basic 12 month daily chart.
The problem with examining just the one lies is in the risk that the observer will extrapolate his conclusions from that time frame to another. For example it may help one to differentiate between a rally that affords a buying opportunity from a “dead-cat” bounce that will leave one stranded with a substantial loss.
Telstra in the past two and a half years has had 3-4 rallies that have disappointed after the share-price broke down through support at $6, and the down-trend remains intact at the present time.
It is suggested however, on the basis of the weekly chart, that now may not be the best time to sell. The share price has fallen back to a previous support level at $4, and has now formed what may proved to be a double bottom. Furthermore the RSI indicator suggests that the stock may have been over-sold.
Readers are reminded however that they should not make their investment decisions on the basis of technical analysis alone, but take into account the opinion of their stock-broker or financial advisor in relation to their specific investment needs.
Categories: Chart Analyses