|This daily chart (Figure 1) of 3M illustrates what often happens to stocks in a sizable correction: they slip into failure mode. They have bear rallies that end at or near their 20-day exponential moving average (EMA).|
|Now there are several indications for 3M to have a tradable upside target. Above the chart, the average directional movement index (ADX) is "overheated" and pushing for a reversal of the DIs (directional index). If the green or positive directional index rise above the red or negative directional index, then the bulls gain the upper hand.|
|FIGURE 1: MMM. 3M Co. shows some upside promise.|
|Graphic provided by: StockCharts.com.|
|Below the chart, we see several more bullish indicators. The MACD (moving average convergence/divergence) has recently flashed a buy signal from an oversold level.|
Likewise, the relative strength index (RSI) has also risen above a recent oversold level. Finally, the stochastic oscillator has made a bullish upswing above the often key 50 area.
|The target zone, should this move hold above the 20 EMA, is $76–78. This zone encompasses triple resistance in the form of gap resistance, 200-day EMA, and trendline resistance. Should a bull thrust continue higher, anticipate resistance at $82.|
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