Day 10: The Mash Up Project

What I like about this bottoming pattern is that it looks like two separate charts that have been mashed together: the pre-November 2016 era was energy waste within an established sideways trend. Whereas, Post November 2016 was the start of a mini-bullish trend.

Two stories joined together at the hip

Up till January 2016, the stock was under massive price destruction. From this view, we can see price falling from $165 down to around $90 to $95. After such an unforgiving loss, the bulls found mini support at the $90 level. From this view, it’s difficult to tell if $90 was established support, or if the bulls stepped in after such an exhaustive freefall. Regardless, we see a sharp bullish recoil as price bounces back with some strong bars, but the move only lasts for three months before we start seeing a start of a resistance level forming.

Price destruction up till early 2016 then we get the bullish bounce

Typically, I like seeing volume surge at the bottom; the frenzy is exciting. However, we have seen examples of below-average volume at the key reversal points that work as well. Here, we get three bottoming volume surges to the left of the divider. Just take a look at the volume spikes.

What I like even more is that all three of these lows are at roughly the same support level, which reduces any guesswork, and goes further to show that investors feel that this $90 support level is not something to overlook.

While aggressive traders would enter off the $90 support level bounces, conservative investors, like myself, would wait for a clean break above the $115 resistance.

Clean support, and look at those volume spikes!

Something switches after November 2016, and rather than the ping-ponging between support and resistance levels, price begins to develop a mini bullish trendline.  

For me, this is confusing, because I was ready to wait for the break above the $115 resistance level. But here, we can see a bullish bias within the sideways trend.

But am I overthinking this? Let’s step back for a second and see if we can simplify this. If we extend the $115 resistance level and combine that with the mini bullish trend, what do we notice? We see a simple wedge pattern, and we are already starting to see a false breakout in July. And again, the price was looking for another breakout in October 2017. 

With all these false breakouts, it may be worthwhile to wait for a robust bullish confirmation just before seeing if there are any bullish opportunities. 

This was confusing, but after identifying the wedge pattern this made things easier to analyze

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