Well, don't say that the warning signs were not presented. In fact, I called $3.60 as the short term downside risk over a week ago. I also pointed to the warning flag and informed you that a real potential existed to visit these levels despite a good fundamental story. The question now is what happens from here. Where are the risks, and what is the potential upside?
Now that we have tested the $3.60 level we MUST look at the next leg down. The trend is now down, and we can not ignore that. The short term support level on the downside is at $3.49. The next level below that is the 100 Day EMA at about $3.45. The 50 day EMA at $3.62 was broken. Tomorrows action will be telling. If we can get back above $3.62, then we could be justified in calling the dip to $3.60 a bounce. If we stay below we need to look to $3.49.
The EMA's now have two warning flags and a third is getting ready to develop. We also have caution flags across the board. Ignore these signals at your own risk. If you are long term keep solace in the fact that the fundamental story remains strong. If you are a trader be prepared for a dip to $3.50 or so in the next two days. Confirmation tomorrow would be going down again on similar or greater volume, but if you feel confident in these signals, making the play early can reap rewards.
Simply stated, the technical story right now is a bearish one. Watch the volume and the early action to see the next move. The upward potential is right now capped at $3.75 or so.
Support and Resistance
Exponential Moving Averages