Breakout Above Friday’s High is a Sign of Strength

Depending on where it closes the day, today’s price action might result in a bullish hammer candlestick pattern. If it does, a breakout above Friday’s high of 3.12 will show strength and a one-day bullish reversal from a key long-term support zone. Whether strength continues from there remains to be seen.

Further testing of the support zone may also occur before bullish follow through. Upside price targets for a bullish reversal, if it is sustained, start with the completion of a gap at a daily low of 3.36 and a prior swing high at 3.39. Notice that there are two metrics pointing to a similar price area thereby increasing the potential significance of that price zone.

Key Upside Target Around 50-Day MA

Since the 50-Day MA was busted on the way down earlier this week, it seems likely to be tested as resistance on the way back up. And the 50-Day line is joined by the 38.2% Fibonacci retracement. Together, they identify a potential resistance zone around 3.51. Next up, there is a potentially more significance resistance zone from 3.64 to 3.71.

The range begins with a prior swing high and top of the symmetrical triangle bottom at 3.64. Included within the range is the 50% retracement at 3.67. Finally, it ends with the 20-Day MA, which is currently at 3.71. Note that the 20-Day line is falling and getting closer to the 50% retracement. A declining trendline showing dynamic resistance of the current bearish correction has been added to the chart as a guide.

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