Long Term Charts (Part 1)

I was looking over some older charts this weekend, and look for places that I might have entered and might have sold. I looked at these charts using very simple technical analysis. I used 150 and 200 day moving averages, as well as support and resistance lines. I also highlighted Relative Strength in one instance. This is a good demonstration to someone who is new to technical analysis. It shows that even though support, resistance, and moving averages are the most basic of the approach, they are also the most important. Note that when I trade I'm looking at a lot of other things, this is just a demonstration.

The chart below is of CEDC. Notice how after an extended uptrend ( some of which was cut off to the left of the chart) it consolidated for about a year. The moving averages started trending down and price bounced off of it's declining trendline multiple times. Finally in October of 2006 it broke out and ran to about $30. Those who were not convinced about the initial breakout could have waited for a pullback that happened in March of 2007. You could have entered anywhere around $25-$28 range, with a tight stop at $24. This pullback was supported not only by it's previous resistance line, but also it's upward sloping moving averages. You would have easily caught a double over the next year or so. The moving averages started to flatten out around August of 2008, at which point price violated it's moving averages by quite a bit. Even if you didn't get out until price fell to $55, you would still have a nice gain on your hands.