Deere DE Sets up a Rounded Arc Reversal Breakdown
Mon, Mar 27, 3:21 PM ET, by Corey Rosenbloom
The “Rounded Reversal” Pattern takes a while to set-up on the chart but can produce explosive results.
Let’s see a current example unfolding in Deere & Co (DE) where you can follow in real time:
Deere (DE) appeared consistently on our list of “Strong Stocks Getting Stronger” during the rally from $80 to the current peak near $112.
However, during March, lengthy divergences undercut the rally as price stabilized into a range.
It’s likely we’re seeing a Distribution Arc, or more specifically a “Rounded Reversal” price pattern.
Today’s breakdown beneath the rising 50 day EMA and lower Bollinger Band – especially on a gap – suggests the supply/demand relationship has changed to favor the bears.
With the breakdown, continue focusing on additional movement beneath the 50 day EMA toward lower levels like $100 or even the rising 200 day SMA nearing $94.00 per share.
There’s never a guarantee that any pattern will work out perfectly, so this Rounded Reversal would be considered a failure – and today a Bear Trap – should price react higher (buyers step in aggressively) back above $110.
If you’re trading this, frame your trades in terms of these levels and if not, continue watching how this interesting pattern plays out this time.
Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.
Corey Rosenbloom, CMT
Afraid to Trade.com
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Corey's book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).”
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