Huaneng Power, H-share (0902.HK), Daily Chart

A couple of weeks ago I wrote about an ugly candlestick that was shaping up on Huaneng Power's weekly chart. The stock dropped about 15% off its high and found support at the 20-day moving average. A pretty hammer then formed (at the arrow) on the daily chart giving an excellent spot to get long above.

By reading the widely treasured manual, Trading Techniques for Dummies, we all know to get long above 'down' bars in an uptrend (and short below 'up' bars in a downtrend). One would expect price to return to the major swing high around 11.25, and it's rapidly making its way up to that goal.

The telltale action will happen at the old high: will it blast through or dither around? A short-term trader isn't overly concerned about that -- he will sell when price hits the objective no matter what.

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