Wanted to share with you a couple of reasons why I believe this stock is about to skyrocket and why I'm not worrying about the "lack of significant movement" in this stock. So let's get right to it.
First of all, let's analyze the context on a Weekly chart:
So since 2019 price has been going down with lower lows and lower highs, indicating a clear downtrend. Then in November 2020 we have the bottom and after that a new swing high which broke the previous swing high. This indicates a possible reversal and change of trend. Also notice in the chart how in this new swing high price almost touched the 50 day moving average(the yellow line), and bounced from this zone/level because the 50 day moving average is a very important dynamic resistance level(dynamic meaning that it's a resistance level that moves, contrary to a horizontal level which would be static, i.e. you draw a horizontal line on the chart to mark an important support level like let's say 0.60).
Let's go now to the Daily chart so we can zoom in and do some more analysis.
Notice how that new swing high we were just talking about(the one that broke the previous swing high and that signaled a new change in trend) bounced from the 200 EMA(which is even more important than the 50 EMA). IT bounced from there and now price entered a correction, also known as a retracement or pullback, or more commonly known to apes and smooth brains as "the dip".
Now the following are two things that are really important from this pullback:
The steepness of the pullback
The fact that, as you can see from the purple lines drawn in the cart, this dip has formed a Pennant pattern.
OK, let's talk a bit about that.
Steepness of the pullback
These two pullbacks are not the same. In the one on the left sellers have a lot of momentum and are gaining ground. They are clearly winning this battle. On the other hand, the one to the right shows price going down, yes, but the move not only doesn't have the same force and momentum as the pullback to the left, but it also tells us something very important: buyers are defending these levels.
Let me show you a visual of what I mean so you have a better idea and can recognize faster in charts.
As sellers attack and bring price down during the pullback, buyers also start buying either passively using resting orders also known as limit orders, or aggressively using market orders, which counteracts the force of the sellers and acts as a barrier not letting price continue going down with force as in the pullback with more force to the downside in the image above.
Now, is all this really important? Yes. We need to understand this so we are better able to understand what's going with the price action and in the current pullback in the Daily chart. Let's check it out.
As you can see, this pullback hasn't had a lot of force to the downside and has basically been grinding down for months as price has been consolidating and buyers have been defending these levels. This price action forms a particular pattern called a pennant. That brings me to my next point.
2. The Pennant pattern
What in the world is a pennant?
A Pennant is a short-term continuation pattern that marks a small consolidation before the previous move resumes. This pattern is usually preceded by a sharp advance or decline with heavy volume, and mark a midpoint of the move.
Ok, so there are some important concepts here. First, it is a continuation pattern. This means that price will continue the same way it was going before the pullback. Secondly, it is a pattern that marks a consolidation--think here "taking a breather", some buyers taking profits, some sellers attacking, some sellers and buyers duking it out, etc, you get the idea...it's basically price making a pit stop before the previous move resumes and continues on its course.
As previously stated, this pattern is usually preceded by a sharp advance or decline with heavy volume, so that begs the question: does NAKD's price action show any sharp advances and heavy volume before the start of this Pennant formation? Let's check it out.
As we can see here, there were two sharp advances to the upside both with heavy volume way higher than the average daily volume. Good stuff.
So we can see how the Daily chart shows that for the past few weeks, and months, price has just been consolidating and making a pause before resuming its previous move to the upside. Understanding and knowing this should appease our daily worry and anxiety when we expect price to go to the moon on a daily basis and it hasn't...yet.
But hold your horses, we are not done yet. As a final point, I want to show you why price has stalled right here on this specific location forming a pennant pattern on the chart, a pattern that only marks a pause in the market before resuming it's previous move, which in this case is
to the upside the moon!!!. 🤣🚀🌑
So what's the reason? Well, lemme show you. For that, we'll have to zoom out a little bit and take a 10,000 ft view for the big picture, so let's go check out the Monthly chart.
This is the view from 10,000 ft and what we can see is that price is right below a moving average(the blue line). Remember, moving averages are important dynamic levels of resistance, and big institutions like hedge funds, pension funds, banks, whales, big players, and basically everybody in the whole world is watching these levels(so they become a self-fulfilling prophecy). This is really important. But the following is also very important: the higher the timeframe(chart) we are looking at(in this case the Monthly chart, which is higher than the Daily chart), the higher the importance and weight of patterns and signals, in this case price being against a moving average. So let's zoom it a bit inside the Monthly chart so we can see clearly what's going on.
Here we can see price started going up in November 2020 as we previously saw, then got to the 9 EMA(exponential moving average) at point 1 and bounced from there(as it is an important resistance), then we have a swing low with a low of 0.4626 at point A, then headed back up to the moving average at point 2 but was rejected by sellers(as seen by the candlestick with a small body and a long shadow/wick), then price went down to point B with a low of 0.4800, then buyers headed back to the moving average to retest the area but were shut down again for a third time at point 3, then price headed down again to point C which is the current month of October and which has so far a low of 0.5812.
Notice 3 things: First, the green candle at point 1 that touched the moving average(blue line, 9 EMA) was rejected, the second green candle at point 2 got close and was rejected, and green candle at point 3 crossed the moving average momentarily but was also rejected. None of these candles closed above the moving average. This is significant and very important. Secondly, none of the lows of any of the red candlesin inside the pennant broke any of the lows of the previous red candles at points A, B and C, on the contrary, every low was higher, which tells you two things: 1) the trend is not broken and 2) price is rising. And thirdly, and finally: the last two green candles inside the pennant closed higher than the close of the green candle at point 2 inside the pennant, which is bullish.
We are at the apex of the pennant and price is really congested at the moment, and we having higher lows and higher highs inside the pennant, which is a good sign and bullish. We should soon breakout from this congested and shrinking area of consolidation soon, and as the pressure comes from a long term higher timeframe as the Monthly(and also Weekly) when price does breakout from this pennant it should breakout with a lot of force, momentum and heavy and possibly extreme volume. I expect price to skyrocket when it does breakout to the upside.
And as an added bonus, I'll leave here my thoughts on where price is headed after it skyrockets:
Using Fibonacci Extensions, my hypothesis is that price will first make a stop at $10. Why? Because the Fibonacci Extension level of 0.786 is right at a major important resistance level that we can see if we go to the Weekly chart and zoom out a little bit:
Well, that's it guys! I know some of you are demoralized and anxious about $NAKD not moving much in the past few weeks/months. and maybe some of you have even considered selling. I get it. But hopefully this analysis can help you regain focus, strength and a good spirit as we wait for MOASS, and to HODL strong so one day, when MOASS happens, we can all laugh all the way to the bank...or the car dealership to get that Lambo!!!
DON"T EVER EVER EVER SELL because...
WHO ARE WE? WE ARE DIAMOND HANDS AND WE ARE NOT LEAVING!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
LET"S GOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO! 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🌑