Day 4: Rise from the Rubble

YES! Everyone loves a good “Rise from the Rubble” type of story, and it doesn’t get better than this. Let’s sift through the dirt here and see if we can find some diamonds.

The first thing that caught my eye is the dramatic rise and fall. Many guys (and I’ve done this too), see a chart that rose so rapidly, that we naturally assume that the price should rise again. That’s not always the case, because, for all we know, this sideways range we have since June 2019 could be a breather before the bears continue taking the stock back downwards. It’s all in how you look at it.

A dramatic rise. And a dramtic fall.

That’s investing for you: you pick which setups feel comfortable, and which fit within your risk and portfolio. Initially, I saw this stock and added it to my watchlist sometime in the middle of 2018 – I was waiting for the stock to take a breather, or a pullback to get into it. We can cleanly draw the trendline that’s been going on from 2017 till late 2018. And we can circle the lows to make a strong visual view of how the lows were going up, quick.

The lows kept going higher.

The same can be said about the price descents. Similarly, I can draw the upper resistance trendline, and circle the highs – look at how the tops fall just as quick as the lows were rising before the stock rolled over in late 2018.

… But price fell just as fast too

What these two lines do is make room to show us the narrowband bottoming pattern that’s been forming since mid-2019. There are two bullish setups simultaneously occurring here: a breakout of the bearish trendline and a breakout of the narrow bottoming range – which could both happen at the same time!

Two simultaneous setups occurring here. Watch for clues in the volume.

What a setup! If we look at the volume, we can see volume increasing as the price was also going upwards. So while we are seeing price breakout right now, it’s not entirely convincing me. What I would like to see is a strong breakout of both of these setups.  

I’m keeping this set up close to the top of my watchlist to see how this setup evolves over the next couple weeks: will price breakaway to the upside? Or stall and start going back down, or worse, break through the $45 support level.

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