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Measured move


Here's a daily chart of $NVCR. It has, so to say, done nothing for 7 months (sideways trading).

From mid October to yesterday's close, we are looking at an ascending triangle, to be confirmed once the price can breakout of its strong resistance around the 22.50-23.00 level. If this breakout would occur (remember we are always dealing with probabilities and possibilities, never certainties) we can then "project" a target price a few cents above $30. This target price is derived from a measured moved, from the bottom (start) of the ascending triangle, vertically to the top, and replicating that distance, this time starting from the resistance breakout level.

With an upside potential of $7, i.e. target price ($30) minus the breakout level ($23) and a downside risk of $3 (in case of a false breakout and price trades back into its 7 months range), the risk/reward ratio of 2.33 (risking 1 to get 2.33) is attractive.

#Measuredmove #NVCR #targetprice #RiskRewardRatio

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