The long term uptrend looks an attractive proposition when considering the scope of movement that is possible for this stock with the price reversal that happened during the end of last year providing the strongest evidence of bias to the upside. Since reaching its highs in the beginning of 2015 the price has remained lethargic but exhibits traits of sufficient support just beneath $28.
This has been highlighted by the horizontal red line that's acted as a robust buying areas on two separate occasions within a short span of time. On the first occasion the price rallied off the uptrend as mentioned in the previous paragraph but subsequently met resistance which forms a pivotal part in the progression of direction in the next move.
Current price action is situated at this resistance zone leaving many wondering whether the return move back from the pullback might have reached its end. This wouldn't be far fetched if you incorporated the stochastic into your decision making where it lies in the overbought region however there are a number of other technical points that speak contrary to this analysis.
Firstly you'll recognize a neatly formed inverted Cup & Handle formation at the top of the rally, a marked sign that the extended run might have become exhausted. This has proven true but only in the sense that we haven't witnessed much movement in either direction whereas one would've thought there could have been a signal of trouble below.
Those who might've anticipated this may be stuck in the trade which could explain why the stock is currently stuck within another price range. It's important to note that there had been no confirmed break to the downside on a closing basis which might suggest the numbers participating in the short side of the trade might be few and far between.
Should we see a break to the upside though it can be expected for price to rally hard given the position of the RSI where the indicator is set to break to its highest levels in almost two years. This signals an intention from the bulls to use momentum in driving price higher with the most obvious target being the all time highs.
Weekly
Taking a closer look on the weekly charts it appears that a classic Head & Shoulder pattern has been in place for some time. The formation took a little over a year to form and broke to the downside in July last year but the move many bears had hoped for failed to materialise after a retest of the neckline proved weak with the bulls taking full advantage and driving prices higher.
Coincidentally a nullification of such formation would require the price to reach above the highest high of either shoulder with the left shoulder being such in this particular case. Observing the rally off the support just underneath $28 as mentioned in the monthly analysis we now see the highs of the left shoulder provided stiff opposition to the bulls offensive.
Following on from this a smaller technical formation of a Cup & Handle in relevance to the pattern just discussed gave bulls a sense of optimism again with a clean break through the top of the neckline and onwards to resistance which brings us to where price is situated presently.
A similar occurrence in the stochastic as we saw on the monthly the indicator is overbought and headed downwards suggesting pressure on the buyers to perform but the RSI has produced a significant uptrend on the indicator that also confirms the buyer's intentions from the monthly.
Two scenarios could play out here; either buyers succumb to the selling pressure and scale the price down to the $28 support level or they find a positive news story to leverage themselves over the top of the $35.50 resistance which would make $38 an attractive target. A move in either direction seems tentative so its certainly one to watch closely in the days ahead but my intuition tells me it could go to the upside.
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