I recorded a review for Research In Motion (RIMM), a stock being talked-up on social networks these days. Most expect a rally and I wanted to analyze price structure using my trading method on both the weekly and the daily timeframes in order to understand the move potential. As a result I was able to synthesize some trading indications given in the video and in the commentary below.
Hereunder is my video analysis for RIMM:
The stock is rallying into the next level of resistance located at 13.95. On the daily chart price is basically at target (9.80), with reference to a long setup started lower in the 7.30-40 area. I would not chase price at these levels. RIMM could be moving in extensions on the daily timeframe and, if this is the case, the next support is seen at 9.10-20 area (based on Monday’s close), with a stop below 8.95. Targets for such setup would be 10.10 (1st target) and 10.60 (2nd target).
If RIMM price keeps moving higher the first resistance level is at 13.95 as said above, an area for partial profits. Should bulls be capable of moving price above the 15.80 level, the next level of resistance Program Trading would be watching to start selling again is 38.30, another area for partial profits. Should price be able to keep moving higher despite resistance and break above 46.90 I would completely exit longs positions.
Of course I am getting ahead of myself here because a lot needs to happen for price to get there. However the objective was to provide information that can be used to create a trading plan for RIMM going forward, in the medium and long-term. Notice that if price breaks above the 15.80 level, we could see a retracement into the 11.00 to 12.00 area before price can continue higher into the next level of resistance at 38.30.
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