Renewable Energy Corp Ltd - April 2001

Renewable Energy Corp Ltd - April 2001

Note first the distribution pattern February/March for this stock. Very similar to the pattern the Dow gave on its weekly chart. Shorter time frame for REL, same pattern, same result though. The pattern at the top there is almost diamond shaped (if you think I am over imagining here - I accept the criticism. The lows are more level and put the shape out a little). A very good reversal pattern if you ever see it. Once the distribution is over, - the lows broke at the 3rd attempt in this example - the down move commences - will be worse if volume increases - as it does here. Generally a move at least back by half of the original up trend can then be expected, and / or the previous tops to offer support : about $1.25 here (funny how that's also about half the run - so if you work this backwards, is another maths reason for distribution at $1.90 or so. Important - if a pattern like that at the top, breaks to the downside, it is time to get out.

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