Given an enquiry I received about FPH I thought it worthwhile updating my commentary of last month.

FPH did not break higher above resistance as hoped but fell back to an underlying uptrend support line. The chart immediately below is a weekly chart whereas the original chart was daily. I use both in my analysis but the weekly chart is the principal reference as most charting signals rely on weekly, not daily, price movements. I’ve also adjusted the uptrend line from the ‘simplified’ trendline (as per my basic education package) to the more complex technical trendline (explained in my advanced material). There are two acceptable trendline placements in my opinion. I am relying on the black dashed line, but the steeper red dashed line is also technically correct. If relying on that steeper line for a sell signal such as 2 weekly closes below same, a sell would have triggered on the week ended 18 September. However, my trading rules (based on a backtest over several years which suggested FPH often briefly breaks below uptrend lines before recovering) require price to fall and to close more than 10% below a higher trough (see educational material). The recent fall was 8.6% below the higher trough so it did not trigger my stop loss before rising strongly last week. Hopefully, it will now recover to rise above $35 as originally suggested – but these are troubled times and noting is guaranteed.

FPH 26Sept2020

28 August 2020

FPH has been rising consistently for about 8 years and had you used a Trendline Trading Technique as explained in my material to enter the return on the trade would have been in excess of 1500%! I traded the stock in July with the thick green line my target and managed to sell at the top. Price then fell away before having another try at the target level (resistance) only to fall away again. I've bought back in on the basis that price will now break that resistance and give me a target of $38.75. While FPH's run has to come to an end sooner or later I'm planning to stick with it as a long term trade rather than my usual strategy if rising the rises and buying back in after a fall back. My stop loss will be 10% below buy in or subsequent higher trough. I will also use 2 consecutive weekly closes below a valid trend line as a potential stop loss.

FPH 27Aug2020


Robert Norman

Phone: 0428 346 951

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