Just on WOW....On a second look at the weekly chart, I feel Ive missed some important things. A look further back in the chart shows a clear head and shoulders pattern with the neckline the orange line. This neckline broke and price rallied back above it.
What concerns me though as well as this bearish pattern is that price has been trending up in an ascending channel but have a look at the bearish divergence with ACC/DIS. Over a shorter time frame it looks as though ACC/DIS is just going with the trend, in fact before I said it was showing very slight positive divergence with the short term channel. But this slight positive divergence is only converging with the most recent short term descending channel marked on the chart.
But when you take a look back over 4 years, you see a bigger monster brewing here. For a start you see the head and shoulders pattern which is bearish even though price rallied back above the neckline. It since failed to clear the head of the pattern meaning the head and shoulders is still valid. But also I see a much larger ascending channel that looks like a countertrend pullback to a large down trend. The main reason its suss is the angle of it. It looks like its going to break and is quite shallow.
Right now price hasnt broken this countertrend pullback. But have a look at the recent negative divergence on ACC/DIS......this is showing severe weakness in this stock and is a big red flag for me that that trendline is all set to get broken. You would need price to confirm it, but that is extremely bearish.
Even though this stock looks oversold and is probably due for a bounce off the bottom of the larger uptrending channel, its a good example of a trade that is just not worth the risk. The largest trend is down (which the most important) the medium term trend is up and the short term trend is down.
Please tell me if you guys think im seeing things here and perhaps getting caught up in the channels or missinterpreting them. Have a look at the bottom chart with the green lines and have a look at the angle of the decent and then the pullback and then what I think is likely to happen. Im going a little cross-eyed with this chart...lol
It would be like trying to sink a battleship with a pebble.
