Technical Structure Favors the Bulls
The subsequent formation of a symmetrical triangle consolidation pattern further strengthened the bullish technical outlook. All major moving averages were reclaimed, along with the downtrend line. Most recently, the pullback confirmed support near the downtrend line and the 20-day and 50-day moving averages. The two averages had converged near one another, reflecting price compression and the potential for an expansion in bullish momentum.
Support Holds the Key to Higher Targets
Since the initial triangle breakout signal occurred on Monday above $34.02, traders will be watching for the first pullback and a subsequent resumption of the trend. Key support is near the breakout zone and a decline to that area would be normal. However, if support holds above that level, followed by renewed buying pressure, it will indicate stronger demand. Conversely, a failure to hold support and a move back into the triangle would signal weakness.
Initial upside targets begin with the 200-day moving average, currently near $38.92 and falling. Above that, a prior swing high at $41.64 from February marks the next resistance area, while the 78.6% Fibonacci retracement of the prior decline at $46.08 identifies the next upside target zone. Whether the breakout develops into a sustained advance will likely depend on how the stock behaves during its first meaningful pullback. Holding above the breakout zone would reinforce the bullish reversal signaled at the start of the week and increase the probability that a new intermediate-term uptrend is underway.
Source: Original Article
