Chart Analysis: Where Is My Next Checkpoint?

Once I find momentum on a chart I ask myself the following question...

Where is my next checkpoint?

This is the level I believe an index or stock could reach if the momentum keeps going the way it's going. 




How do I determine where my next checkpoint will be?

Well this part is totally subjective. I admit that it's a purely personal decision. It's my educated guess!

However, I do work off certain guidelines when I make this decision:

Round numbers approach
E.g. Lets say a stock is moving upwards. Pretend the current price is $17.30. Using a round number projection I might have a checkpoint at $20.00 which is a round number to me.

Chart Pattern approach
E.g. This time pretend a stock is falling fast. Pretend the current price is $7.70. If I spot a support level at $7.00 I might just call that my checkpoint.

To summarise, deciding where I’m going to place my next checkpoint is a purely personal decision.

It is based on my chart analysis and my gut feel for where I believe the market may be heading.