With last Friday’s (Mar-28-2014) sell off, breaking the support at $8.81 (38.2% Fibonacci retracement), most would have sold their bullish position. I also went to close my position as it has hit my stop loss target.
Just before closing, when I looked at the momentum, I found something fishy. Momentum is diverging. For a sudden drop like this that is unusual. Looking further, I think we are in the process of completing wave 2 retracement. Probably we may have already completed.
The Friday’s low of $8.21 is just 4 cents higher than the 50% Fibonacci retracement at $8.17.
As indicated by my dark blue line, stock had previous support at $8.23.
Also it just touched the bottom downtrend channel (highlighted in orange).
If I am correct, Monday price should go up. If it can go above $9.56, we are in wave 3 uptrend.
Just before closing, when I looked at the momentum, I found something fishy. Momentum is diverging. For a sudden drop like this that is unusual. Looking further, I think we are in the process of completing wave 2 retracement. Probably we may have already completed.
The Friday’s low of $8.21 is just 4 cents higher than the 50% Fibonacci retracement at $8.17.
As indicated by my dark blue line, stock had previous support at $8.23.
Also it just touched the bottom downtrend channel (highlighted in orange).
If I am correct, Monday price should go up. If it can go above $9.56, we are in wave 3 uptrend.