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Amlin shares (LSE:AML) are not attractive right now, because they have been in a general equilibrium phase for a long period of time. The price simply oscillates between the resistance level at 550.00 and the support level at 450.00, without any protractedly directional movement.
The price moves briefly above and below the EMA 21, trapping both the bear and the bulls. Then the Williams % Range period 20 saunters to and fro within overbought and oversold areas, while there are no significant movement in the price, These are attributes peculiar to a ranging market.
Since the market is currently ranging, it is only sexy to day traders. Investors and position traders may stay away until things look sexy again (trending), for that is the kind of the market in which they can gain anything meaningful. One thing is sure: we would soon see a crazy move of about 5000 points upwards or 5000 points downwards just in a week. That will occur sometimes before the end of this year.
IMPORTANT NOTE: This article was written last week and due to my tight schedule, I was unable to post it till today. I can see that the price on Amlin has GAPPED crazily upwards. This is a movement that was predicated! A recent chart has been included with the analysis. The gap may be filled, causing a serious bearish correction; or it may not be filled, causing the current crazy bull market to evolve further.
The markets sometimes move predictably and sometimes, they move unpredictably. They are predictable enough to allow some traders make average profits that are bigger than average losses. They are also not predictable in certain cases, to the extent that this makes trading one of the most daunting tasks in the world. Coming to grips with the predictability as intertwined with the unpredictability is what can catapult us ahead of many others.
This forecast is ended by the quote below:
“People when influenced by crowds often do things for which they have no rational explanation. The same is true in trading. As the Japanese are fond of saying: To take no action is an action. Unfortunately, traders believe somewhat falsely they must always being doing something, even if it is the wrong thing.” – Chris Tate
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