Make or Break Time for Yahoo!

09/16/2013 7:00 am EST


Corey Rosenbloom

Founder and President, Afraid to Trade

For the first time in over five years, this tech giant’s stock price topped $30, and technician Corey Rosenbloom of examines the technical evidence to see whether it can continue this breakout.

With the break to new recovery highs today in Yahoo (YHOO) shares after a stellar recovery, we focus our attention on the “will it or won’t it” continue the breakout or else pullback once again with a trap.

Let’s take a look at the daily chart “make or break” key level and put this in the context of the broader picture:

Click to Enlarge

The key focal point for traders is the current $29.50 to $30.00 per share level, which reflects the July breakout highs and the current breakout—and reversal candle Thursday—above then beneath the easy-reference $30.00 breakout level.

Just like July, we saw a sharp spike higher, only to see price return quickly toward the $27.00 polarity or lower support trendline.

We’ll be using IF/THEN planning with respect to this level.

A breakout and sustained movement up away from $30.00 per share “should” lead to additional tradable, pro-trend upside action in the context of the weekly chart (below).

Otherwise, if we see another return under $30.00—a bull trap—then we may be anticipating or trading a movement back to the $27.00 per share confluence (this is best seen on the daily chart above).

Here’s the broader weekly chart pro-trend structure:

Click to Enlarge

After a multi-year compression or consolidation pattern (yellow highlight), shares broke powerfully above the $16.50 and $17.00 per share level on higher buy-volume and upside momentum.

The breakout—and new bullish uptrend—continues to this day where we encounter the current “make or break” price level into $30.00 per share.

Yahoo’s share price has doubled from the $15.00 per share midpoint value area or central price of the compression pattern.

Whether you’re trading Yahoo shares or just following along for a “walk forward” real-time educational example of how to plan for a “breakout or trap” situation, continue following the short-term activity relative to the $30.00 per share focal level.

By Corey Rosenbloom, CMT, Trader and Blogger,

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