This equity is drifting lower and testing support levels. While looking at the price of an equity dropping does not always seem comfortable, the amount of a potential drop may not be as bad as many investors think. In my opinion the downside risk is the 200 day EMA which sits at about $2.80. From current levels that would be about 20 cents worth of exposure. Meanwhile, over time, the potential upside is $3.50 and beyond. The company is performing well and there is no reason, especially with a share buyback in the plans, for the equity not to make a move at some point. Simply stated we are fast approaching what could be a serious accumulation phase.
Volume on Friday was lighter than the previous day and the equity managed to pick up a penny. While it would appear that a mini bottom has set in, bear in mind that we have yet to see "real" volume on any move of late. Watch for risks below the next support levels at $2.99 and $2.95. Both of these levels have been tested lately. A possible bounce point sits at the 100 day EMA at about $2.95. That is the key level. If this equity closes below $2.95, a trip to $2.80 is much more likely.
Support and Resistance
There is support at $2.99, but the key support is at $2.95. Pay close attention at current levels and below. Strong resistance now sits at $3.08. Things are VERY tight right now. A compelling move of 10 to 15 cents in a couple of sessions is quite possible. Given the risk vs. potential profile, this could be a decent phased entry point. Active traders that guess the direction right can score, while those that guess wrong will be frustrated. Longer term I remain bullish.
Exponential Moving Averages
This is a sea of red and yellow. Be cautious It may not look pretty, but the uglier this chart looks prior to a reversal, the better that reversal will be. Watch volume closely and seek out the bottom if possible. In my opinion phased entry at these levels is a decent strategy.