If we draw a trendline connecting the high of 6 Oct 2010 and 9 Feb 2011, we will get a trendline resistance which, more or less, was what limited the upside yesterday at $1.92. A doji formed yesterday suggesting indecision and a possible reversal. We have confirmation today as price closed lower at $1.85.
Immediate support is found at $1.83. Not only is this where the trendline support is approximating, it is also where we find many times tested resistance and supports in the candlesticks. If $1.83 were to give way, next supports are at $1.80 (50dMA) and $1.76 (rising 20dMA).
What would I do? I like what I see in the ADX. The +DI has the advantage and the ADX is rising. This could be an early uptrend forming. MACD is still rising in positive territory. Volume in the last two sessions were not very high as price experienced weakness. A correction at this stage to shake out some of the weaker holders is healthy so that the counter could form a firmer base for any further upward movement in price. Price has to climb a wall of worries and buying at supports in an uptrend is what I would do.
The overbought condition as seen in the MFI and RSI would have to be corrected and a meaningful pull back is more likely to happen than not. I will accumulate on weakness.
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