CISCO 7-Year Double Bottom Break Out Confirmed, Objective $40
Hi Fellow Risk Takers,
Here is an update to the Trend Reversal Breakout idea on CISCO ($CSCO), posted during January (Potential Multi-Year Trend Reversal Spotted for CISCO)
This idea is ideally intended for the long term, up to 1 year or even longer.
(1) During 2008 crisis period, price of Cisco has plunged from around $33 to as low as $13.50 (-56%), which signals an obvious bearish trend.
Price action during this period has taken the form of a bearish down channel, marked by the 2 red trendlines.
(2) Between Dec 2007 to Jan 2014 (7 Years), price has consolidated sideways in a large range ($27.50 – $13.50). We also note the formation of 2 significant price bottoms formed against $13.50.
This means that the market has for 2 times, sharply reject the idea that CISCO stock is worth lesser than 13.50, forming a potential double bottom formation.
(3) From April 2012 up till now, we note a steady upwards trend channel forming, with price currently hovering around $27.50, which is a critical price level at defining the general overall trend.
If price is resisted at $27.50, this means overall trend is still sideways.
However, if price is able to trade and sustain above $27.50, it indicates the end of the sideways trend and the beginning of a bullish trend.
(4) Next we look closely at the recent price action around $27.50 levels.
For the last 2-3 weeks, bears have attempted to trade short due to resistance level around 27.50.
However, following the earnings release, price had gapped to 28.00 and traded higher above the double bottom break out resistance line.
This means traders who were short are now caught in a bear trap and they are now likely to help drive prices higher.
(Projection)
Due to the 7 Year double bottom pattern spotted at (2) and price action has sustained above $27.50 (4), we confirm that price has broken out, establishing a new bullish trend with intention to trade higher.
(Entry Condition)
Anytime from now, as long as price stays above $27.50
(Stop Loss)
Below $26.00, beneath the lowest point of the mini-consolidation at (4)
(Taking Profit)
Traders will have to exercise much discretion and judgement when it comes to taking profit.
The theoretical price measure indicates a reversal objective at $40.00.
Experienced traders will know that there is a difference between theory and actual price behavior in the markets.
It is expected to take significant time to get t0 $40.00 and is more suited for investors with a long term view, around 1 year or even more.
Partial profit can be taken around $33.00, which is resistance levels stretching back to Oct 2007.
(Risk)
There is a risk that bears will try to resist the price sharply, leading to a false breakout.
Given the longer time frame of this idea, there are bound to be a lot of price fluctuations new information which may prevent the price from reaching the theoretical target of $40.00.
Hence locking in partial profit at arounf $33.00 is prudent.
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Here is an update to the Trend Reversal Breakout idea on CISCO ($CSCO), posted during January (Potential Multi-Year Trend Reversal Spotted for CISCO)
This idea is ideally intended for the long term, up to 1 year or even longer.
(1) During 2008 crisis period, price of Cisco has plunged from around $33 to as low as $13.50 (-56%), which signals an obvious bearish trend.
Price action during this period has taken the form of a bearish down channel, marked by the 2 red trendlines.
(2) Between Dec 2007 to Jan 2014 (7 Years), price has consolidated sideways in a large range ($27.50 – $13.50). We also note the formation of 2 significant price bottoms formed against $13.50.
This means that the market has for 2 times, sharply reject the idea that CISCO stock is worth lesser than 13.50, forming a potential double bottom formation.
(3) From April 2012 up till now, we note a steady upwards trend channel forming, with price currently hovering around $27.50, which is a critical price level at defining the general overall trend.
If price is resisted at $27.50, this means overall trend is still sideways.
However, if price is able to trade and sustain above $27.50, it indicates the end of the sideways trend and the beginning of a bullish trend.
(4) Next we look closely at the recent price action around $27.50 levels.
For the last 2-3 weeks, bears have attempted to trade short due to resistance level around 27.50.
However, following the earnings release, price had gapped to 28.00 and traded higher above the double bottom break out resistance line.
This means traders who were short are now caught in a bear trap and they are now likely to help drive prices higher.
(Projection)
Due to the 7 Year double bottom pattern spotted at (2) and price action has sustained above $27.50 (4), we confirm that price has broken out, establishing a new bullish trend with intention to trade higher.
(Entry Condition)
Anytime from now, as long as price stays above $27.50
(Stop Loss)
Below $26.00, beneath the lowest point of the mini-consolidation at (4)
(Taking Profit)
Traders will have to exercise much discretion and judgement when it comes to taking profit.
The theoretical price measure indicates a reversal objective at $40.00.
Experienced traders will know that there is a difference between theory and actual price behavior in the markets.
It is expected to take significant time to get t0 $40.00 and is more suited for investors with a long term view, around 1 year or even more.
Partial profit can be taken around $33.00, which is resistance levels stretching back to Oct 2007.
(Risk)
There is a risk that bears will try to resist the price sharply, leading to a false breakout.
Given the longer time frame of this idea, there are bound to be a lot of price fluctuations new information which may prevent the price from reaching the theoretical target of $40.00.
Hence locking in partial profit at arounf $33.00 is prudent.
Like it, Share it, Follow it~
Trading View: BreakOutArtist
StockTwits: stocktwits.com/BreakOutArtist
Twitter: twitter.com/BrkOutArtist
