CDV chart, page-25

CDV Chart

Given that this chart thread has been going for a while and perhaps lacks some technical assessments, I thought I might offer a view of what is a quite basic, predictable and normal chart pattern unfolding on this stock.

Firstly, I suggest that the strongest support/resistance level of them all is at 50% of the All Time High (ATH) (see level in black below at $0.385). Understanding CDV’s stock price is fairly straightforward when assessed against this reference point.

Referencing the numbers marked on the chart below:

Point 1) Once a stock falls through 50% from its ATH, it will typically continue down to at least the 25% level of the ATH. It doesn’t always go there in one go, but sometimes does. Examples of this phenomenon are FMG, IPL, STO, ILU, QAN, MQG, OZL, BSL just from a quick check of my charts.

In CDV’s case it found support at the 25% ATH level, which was also around the $0.20 round number and hence a pretty strong support point.

Point 2) After such a sharp fall, which represents a dumping and oversold situation, a stock that still has good fundamentals needs to build a base whilst investors gather themselves and restore their confidence before normally rising back to the ATH50% level again. In this case CDV has required 11wks sideways basing before returning to the 50% level, which it was always going to do.

Point 3) Once a stock comes back to the ATH50% level, whether it goes on with it depends on the fundamentals, which in this case are reasonably sound. But a stock often won’t punch back through ATH50% in one go. So what’s happened here is absolutely normal, predictable behaviour.

That is, a stock will typically recover to ATH50% first go, pull back to some modest retracement level, then build up a bit of steam to punch through second go. This is just investors waiting for a better price after a hard run. Although we can’t be sure how far it pulls back, today’s move back to fib 38.2% of the prior rise (as marked in blue number) and a dragonfly doji today suggests we may have found that support pretty easily.

Point ?) From here, as indicated in the blue dotted lines, I’d expect we punch up through ATH50%, price then comes back to that same support level to consolidate before moving on and up. The only real question is whether it needs a bit more consolidation or retracement here below ATH50% or we can push up through it quickly now.

Hope all that makes sense. Bottom line is, if you want to get set you’ll need to do so around current levels. Once we get back above the ATH50% at $0.385 it’s unlikely to fall back below it for the foreseeable future.