I keep posting my thoughts via Stocktwits or Twitter and below is an example of what I posted on Friday morning when the stock was trading around $5.92:
https://twitter.com/amitp_gupta/status/368366990726934530
I said that $6.20 is the next resistance area, and the stock did make a high of $6.18 after which it pulled back under $6.
So, let's now take a look at the daily and weekly charts.
Daily Chart:
You folks see that blue line on the chart above? This is how I figured that $6.20 resistance area, which worked out pretty accurate on Friday.
Weekly Chart:
Looking at the daily chart above:
- Stochastics is 88 and flattening, which tells me that the stock is now extended on this move up and may need to rest, before continue higher. This is one of the best indicators I like on daily chart, and you can see on the above chart as well, that as and when this indicator goes near or over 80, the stock pulls back or consolidates.
- 50MA is @ $5.83 and it was broken pretty easily. It will be healthy for the stock to test this key MA and bounce.
- We all know and have seen that $5.60 (offering price) had been a tough resistance level over the past month or so. If the stock pulls back significantly, this area should provide support. If this support level is broken, we may head down to 20MA or the 52 week lows. Since the FDA AdComm catalyst is just couple of months from now, I do not believe the stock will go down under $5.60, unless something major -ve news comes out.
Looking at the weekly chart above:
- This chart looks much better for longs. Stochastics is way down and is now starting to turn up. This tells that we may be looking for a nice move up very soon.
- RSI is turning up as well and has a long way to go up before we can say it's overbought.
- This week's candle is a clear indication of break out of the consolidation area during last 4-5 weeks.
Conclusion:
We may see a pullback/consolidation here and then, make another move up soon. After $6.20, the next resistance may be $6.40 area which is the 20MA on the weekly and above this level, this looks like a smooth run into $7s before the AdComm on 10/16.
If this pulls back, keep an eye on 50MA support @ $5.83 and then the offering price support @ $5.60.
This is my 1st detailed post on chart analysis, that I have been using for few years for my trading. Hope this helps. Thank you for reading. Comments are always welcome, whether or not you like it :-)
Disclaimer: This post should be used for educational purposes only. I am not a financial advisor and this post should not be considered an advice to buy or sell any stock. You are responsible for your trades. You need to do your own due diligence and make your own decision.
