At this level the stock has attracted tremendous (see 'a' on chart) along with a strong weekly rally (see candle 'a') which is a positive scenario. Stock has been trying to continue the move and hold 580 levels.
Is it a reversal? and will there be a bull rally again from here?
There are three scenarios:
1. Stock may face resistance near 620-630 levels (falling of channel and overhead supply). It does not hold 580 support levels and
retrace back to retest the lows at 500 again. Trust me, this would be positive for the stock to consolidate before initiating a bull run.
2. Stock crosses the 620-630 resistance with strong force, pops out of the channel, retests the 620-630 breakout levels, holds it and continue
3. Unfortunately, the last scenario is least liked by bulls. The stock in this case would be unable to move farther than resistance 600-630 levels
and falls back. Rather than holding 500 it breaks and tests previous trough at 465 or the at 450. It may go as far as 430 which
is the channel support line.
So what should be done?
For long term, wait and watch for confirmations. The zone 580-630 is an important one to watch out for.
For short term, ride the long and short rallies, take profits and move out.
Trade safe and hit the 'like' button if u liked this post.