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MOVING AVERAGES


Citrix Finds Support

01/03/08 12:40:04 PM
by Arthur Hill

Citrix Systems shows signs of life with a high-volume bounce off support and a challenge to its 50-day moving average.

Security:   CTXS
Position:   Accumulate

The 50-day and 200-day moving averages are often used to determine the long-term and medium-term trends. A stock trading above its 200-day moving average is deemed in a long-term uptrend and a stock trading above its 50-day moving average is deemed in a medium-term uptrend. These averages can also act as support and resistance levels.

Citrix Systems (CTXS) declined to its 200-day moving average in November and found support near this key level over the last six weeks. Note how the stock stabilized above 36 in December. This affirms support at 36 and a break below the December lows would be quite bearish. See Figure 1.

FIGURE 1: CITRIX, DAILY. CTXS declined to its 200-day moving average in November and found support near this key level over the following six weeks.
Graphic provided by: TeleChart2007.
 
As long as the support holds, traders should be on guard for an upside breakout. The stock is currently challenging its 50-day moving average and a break above the December high would be bullish. This would target a move toward the November high.

The on-balance volume (OBV) shows signs of strength and favors a breakout. The OBV bottomed in early December and moved sharply higher the entire month. In addition, the stock advanced on above-average volume twice in the last two weeks (green ovals in Figure 1). The stock appears to be under accumulation, and a price breakout could unleash the bulls.



Arthur Hill

Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.

Title: Editor
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