Bullish Reversal Points to $3.84

Today’s advance shows the likely completion of a bottom with a slightly higher swing low established at $3.45. Support was confirmed around the price level by the confluence of the 50-Day MA, the 20-Day MA, a 50% retracement level, and a significant anchored volume weighted average price (AVWAP) support level calculated from the swing low in April. Recently, the 20-Day MA began to rise again and moved away from the 50-Day MA. That dynamic between the two moving averages is a sign of improving underlying demand.

Upside Breakout Possible

There were essentially three attempts following the April swing low to reclaim the $3.84 price level. Resistance was seen at $3.84, which established a swing high. Two subsequent rallies stopped short at $3.83 and $3.82, respectively. Monday’s advance shows another likely attempt will be made. Notice that the 50-Day MA (orange) was last reclaimed on June 2. Therefore, the recent pullback was a successful test of prior dynamic resistance as support. Since it was followed by a bullish reversal, the bearish correction should be complete, with a new attempt to rise above $3.84 likely to be seen next.

Above $3.82 Needed Next

A rally above today’s high of $3.76 will provide the next sign of strength but an advance above the most recent lower swing high of $3.82 will give a more reliable indication. If the $3.84 level is broken a continuation of the rising ABCD pattern will be triggered and increase the chance of eventually reaching the initial target from the pattern at $4.08. That price level can be considered as potential resistance along with the 61.85% Fibonacci retracement level at $4.12.

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