Science of Stock Price Action: When an underperforming stock [i.e. stock that trades below the Moving average Resistance] moves above the resistance; and then pulls back to previous moving average resistance as Support – then it does raise hope of a strong turnaround in the making. All that the stock needs to do: Hold that moving average as support.
Case Study: Chesapeake Energy Corporation
As you can see in the chart above – CHK stock is trying to execute a turnaround by trying to hold the Moving average as support. If the stock holds $3.9 over next few days and weeks, then one can expect huge gains over next few weeks and months.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers