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by Gary Grosschadl
Nortel has almost doubled in the last three months. After such a dramatic rise what are the downside and upside probabilities?
Position: Hold
Gary Grosschadl
Independent Canadian equities trader and technical analyst based in Peterborough
Ontario, Canada.
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CHART ANALYSIS
Nortel Network's Longer-Term View
02/27/04 10:56:20 AMby Gary Grosschadl
Nortel has almost doubled in the last three months. After such a dramatic rise what are the downside and upside probabilities?
Position: Hold
| This weekly chart shows a dramatic comeback from the .80 range back in October 2002. The other very noticeable characteristic is that the stock's rise balked at previous resistance, demonstrating how stock behavior has a memory of its previous support and resistance. |
| A pitchfork was drawn to put this very powerful move in perspective. A hallmark of pitchfork analysis is a move from the lower median line often makes it to the center median line. It takes a super bull move for the stock to go further to hit the upper median line -- something not seen that often. Here is something rare indeed, a move blasting through both median lines and then using the uppermost line as a further launching pad to higher highs. After a move like that, any stock earns a rest or is due for some consolidation. |
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| Weekly chart showing Nortel's dramatic price moves. |
| Graphic provided by: Stockcharts.com. |
| |
| For now Nortel appears to be consolidating on this weekly chart in a rectangular range of $10 - $11.25. A break either way out of this range will likely be the bigger trading signal for the patient trader working in longer time frames. |
| A break above the range will likely test the previous high of $11.94. A bold move past this level would bring a higher target of $12.64, this being the 200-period exponential moving average on a multi-year chart. A move below $10 brings a test of mid-candlestick support of $9.50 so a support zone of $9.50 - $10 is suggested. If this zone fails, then support could be found at any of the previous pitchfork median lines depending on the severity of the decline. |
| The next major move for Nortel could be a substantial one -- but will it be up or down? Watch for a break either way and the likely cataylst could well be major news and or a solid move up or down for the Nasdaq index. |
Independent Canadian equities trader and technical analyst based in Peterborough
Ontario, Canada.
| Website: | www.whatsonsale.ca/financial.html |
| E-mail address: | gwg7@sympatico.ca |
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Date: 02/29/04Rank: 5Comment:
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