Interesting Trading Levels for DELL

11/23/2009 11:06 am EST

Focus: STOCKS

Corey Rosenbloom

Founder and President, Afraid to Trade

With Dell’s (DELL) earnings disappointment Friday morning, let’s pull the perspective back to the weekly time frame to put this drop into perspective and then look at a confluence resistance zone overhead, as well as a confluence support zone underneath.  Which will hold?


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First, let’s observe that the weekly trend structure has formed lower swing lows and lower swing highs, which is the characteristic of an intermediate-term downtrend.

However, the weekly moving averages have crossed bullishly (the 20 EMA (in green) crossed above the 50 EMA  (in blue) in September), which argues for a possible new uptrend in the making.

As long as price stays above these moving averages, which form confluence support, then this would support the “new uptrend” approach.

The 20 and 50 EMAs converge at the $14 per share level, which is where price supports currently.

This would be the confluence support zone to watch, as well as a key “line in the sand” to watch for clues to the future structure.

Any move under $14 would argue for a bearish bias, though if price supports off the $14 level, the new uptrend bias would hold.

Above price, I’m showing two Fibonacci grids, one starting with the October 2008 high and the other from the August 2008 highs, both of which end at the 2009 price lows.

We observe a confluence resistance area at the $17.00 per share level as shown and highlighted on the chart.
Price failed to overcome this confluence resistance level on the recent swing to new 2009 highs in August and September.

So DELL stands between confluence support and resistance, and a break above or beneath either should give us clues as to what to expect going forward.

Let’s keep our eye on these levels!

By Corey Rosenbloom of AfraidToTrade.com

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