Chart of the week - BID High and Tight Flag
Bidenergy (BID) is up 100%+ over the last two months. This is off the back of announcing a complementary robotic concierge for SME, to complement their existing enterprise offering.
The question is whether this rally can continue and if so, by how much?
Using a charting pattern called a High and Tight Flag (HTF) we’ll try and assess the possible outcome, often a 100%+ return is possible, provided the trade criteria is met. Often a High and Tight Flag can double in value quickly.
Trade Criteria: The HTF pattern is highlighted in with the grey line, being the ‘flag pole’ and the blue triangle being the ‘flag’. There are a few key attributes that HTF need to increase the chances of seeing 100%+ returns:
1. Strong flag pole; the vertical grey line shows the flag pole and needs to have a 75%+ rise. BID has more than a 100% rise which bodes well for a further 100% rise from today
2. The flag pole needs to be rapid with little interruption in the rise. BID meets this requirement, mostly with robust volume along the way up, highlighted in the brown circle.
3. After the strong rise in the flag pole, there needs to be a reduction in volatility, which can be
seen via the blue triangle highlighted on BID.
4. When the share price breaks above the blue triangle, the movement should be a strong,
pronounced one, with a significant increase in volume compared to the prior two
weeks. BID shows this with Friday’s isolated candle on the far right and the highlighted higher
volume in the orange circle.
5. Strong movements from companies in the same industry/sector/theme. While the theme was
strong, sister companies TNE and OFX, have been strong, although sisters XRO, APT and EML
have recently slipped back. GTK appears to be making similar moves to last week as
both GTK and BID have show breakouts from Friday. The odds of a HTF proving the strong
return after the breakout described here double when system companies are rising at the