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On 7 October, I said in a blog post that the 61.8% Fibo line "approximates $1.18 and this is also where gap close could take place if the resistance at $1.16 could be taken out convincingly". My overnight sell order at $1.18 was filled.
Closing at $1.205 is exactly where we find the declining 20dMA today. This also coincides with the declining trendline connecting the tops of 1, 9 and 21 Sep. So, it explains why it was such a strong resistance.
With the MACD forming a bullish crossover with the signal line in negative territory, we could see a continuation of this rebound. A necessary condition would be higher volume if price should attempt to push higher. Notice how volume has reduced as price inched higher in recent sessions. This is most probably unsustainable.
Overcoming resistance at $1.205 in the next session convincingly could see buyers piling back into the stock which could then see gap closing at $1.26 and perhaps even at $1.305. The latter is still possible since the declining 50dMA approximates $1.32 and provides some breathing room.
Related post:
ARA: Partial divestment at $1.155.
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2 comments:
Hi AK,
I wouldn't put too much emphasis on the volume or the TA of this counter. The volume is rather low, not sure if TA is really applicable, especially volume analysis. No harm though, some form of indicators are better than none at all :)
Hi LP,
Yes, very low volume means the charts could be easily manipulated.
I remember a blogger saying he laughs at people who do TA for low volume counters. ;p
Personally, I agree that having some indicators is better than none at all. :)
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