What is the outlook for the stock in the near term early January?
The one-look chart of the stock, the Ichimoku chart, depicted below gives a clear picture.
Tankan Sen, the short term moving average, rests at 51.75, while the slightly longer-term moving average, Kinjun Sen, is at 49.18. Chikou Span, the other indicator, which tracks the price 26 days ago, lies at 46.65. Thus, the short-term indicators point to a bullish opening for the stock at the beginning of the new year.
But how long will the rally sustain? What does the Kumo Cloud say?
The Senkou Span A is at 54.80 while Senkou Span B is at 55.35. The Kumo cloud had turned negative on 28th December 2010, and this might act as a dampener to the bullish sentiment
The closing price of 54.70 lies below the Kumo Cloud, and as such Senkou Span A and Senkou Span B will be the two immediate points of resistance. On Friday, the price did test the 2nd resistance of 55.35 but could not pierce it.
Another technical indicator worth mentionining at this point is the RSI index. The 14-day RSI stands at 59.80. In technical terms, any reading above 70 indicates overbought condition while any reading around 20 indicates oversold condition. But, historically, any reading in low 60s for this stock is an overbought condition and the stock turns southward briefly.
We feel that the stock might face stiff resistance at 54.80 and 55.35 going forward and most likely decline to 51.00 in the short term as part of consolidation, before making any further moves.
Current closing price : 54.70
Resistance #! : 54.80
Resistance #2 : 55.35
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