Again today I am posting a chart that wouldn’t normally be thought of as a setup in and of itself necessarily – but is well worth adding to your watchlist in any case because of the interesting technical characteristics that it demonstrates.
You can see that the share price has been in a very consistent uptrend until being broken in early March with the price falling at a rapid rate of knots before finding support at a little over $10.50. What happened after that though is where it gets interesting because the price climbed quickly and found resistance just below the $11.50 mark.
If you look at the support / resistance line that I have drawn on the chart at this level you can see 2 previous times where the price respected these levels. This means that for traders, depending on the setup, that it may be an important level for the placement of stop loss orders.
At the most recent venture to this level the price formed what is sometimes referred to as a ‘tweezer’ formation where the tails of 2 candles found a high at approximately the same level. Ideally it would be identical but you may give it the benefit of the doubt. In addition some traders would say the candles should be next to each other – there is another formation with a different name but the same treatment when there is a candle separating them so the latter issue isn’t really one to get in a twist about.
It will be interesting to see how this chart unfolds but in the immediate term short side traders will be watching most closely to see if the resistance level above the price manages to hang on.