Establishes Higher Daily High and Higher Low

The rally from the April swing low at $2.86 faced a potentially significant resistance zone around Monday’s high at $3.66. There is a range marked by several indicators from $3.72 to $3.74. However, the 50-Day MA has been falling and is now at $3.76, close enough to the initial range to be included. It also offers more useful price levels. The next major hurdle for the bull trend is a daily close above the 50-Day line. Until that happens the expectation is for resistance to continue to be seen up to the 50-Day MA.

Several Indicators Mark Resistance Zone

There is the confluence of several indicators identifying the resistance zone. The range begins with the 61.8% Fibonacci retracement at $3.72. There is then the neckline for a recent head and shoulders topping pattern at $3.74. That price level was confirmed twice as swing lows of the pattern formed in March. Therefore, the neckline has some significance even before the head and shoulders formation is incorporated into the analysis. But there is also an AVWAP level around $3.74. It is anchored on the recent peak.

May Respond to Rise Above $3.76

Since there a several price levels identified close together, an upside breakout through the top of the range would be bullish of course, but more so given the significance of the resistance zone. Furthermore, if it occurred prior to a deeper pullback below $3.42, the bullish implications would strengthen further.

For a look at all of today’s economic events, check out our economic calendar.