Healthway Medical needs a break?

A friend sms me this morning and asked me for a new eventual target price for Healthway Medical as it was last done at 19.5c. I was driving at that point in time and I was amazed at how quickly the counter moved to hit the target price I identified. In slightly more than half an hour from the opening bell, Healthway advanced 2c from 17.5c to 19.5c. However, the eventual target price of 19.5c is based on chart pattern and proved too strong to be taken out so quickly and price closed at 18.5c today.

Most of the time, chart patterns are accurate windows into probable future price movements, resistance and support levels. Our FA says that Healthway is worth a lot more than 19.5c but TA, as a measure of the mass psychology of market participants, tells us where the probable stops are in the meantime.

Healthway Medical has a white candle with a wick on top that is as long as the candle's body. In spite of increased volume today, price closed only 1c higher. OBV still shows accumulation. There is no sell signal on the MACD but this is usually lagging. MFI is levelling off which shows a slow down in buying momentum and remember, it is still in the overbought region. Is a correction due?

Taking a peek at the weekly chart, the MFI has moved sharply into the overbought region. The last time it did this was in April 2009. Technically, there is more downside risk now. I would accumulate after the counter has done either a correction in price or a correction using time. Incidentally, I have divested more of my position in Healthway Medical today.