Groupon GRPN Pushing for Breakout Reversal

Aug 4, 2014: 10:32 AM CST

Groupon shares (GRPN) may be setting up a potential breakout and bullish trend reversal trade.

Let’s start with the Daily Chart and plot future levels for this potential bullish reversal.

Keeping it simple, shares have the potential to break bullishly above the $7.00 price level toward the confluence of the falling 200 day SMA ($8.44) and price high from March 2014.

The breakout signal did not trigger today, and thus we’re only setting up a game-plan to plan potential trades.

Shares remain in the neutral/bullish zone between $6.50 and $7.00 and otherwise would trigger a bearish breakdown (downtrend continuity) reversal under $6.00.

Plan entry, management, and targets based on these levels.

We get a bit more perspective from the Weekly Chart:

I drew a short-term Fibonacci Retracement of the 2012 to 2013 rally and highlight price trading slightly under the 61.8% level near $6.50.

On this grid, Fibonacci levels include (roughly) $6.50, $7.70, and $8.90.

We again see a confluence with the $9.00 per share target mentioned above.

Again, should shares fall into the resistance cluster near $7.00 (falling 20 week EMA) then the downtrend would likely continue without a reversal signal.

Update your charts and trade-plans with these target reference level.

Corey Rosenbloom, CMT
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