New Life for BlackBerry BBRY Shares on a Breakout

Aug 5, 2013: 11:05 AM CST

This morning saw an initial breakout and powerful upside continuation for shares of BlackBerry (BBRY) which draws our attention this morning.

Let’s take a quick chart-update for the stock and note the breakout and key levels to watch going forward.

First, the broader Daily Chart (note the 20d EMA breakout):

BBRY Blackberry Daily Chart Breakout Trend Reversal

From a historical perspective (at least during 2013), shares traded between a compressing or symmetrical triangle trendline price pattern which gave-way to a stunning gap breakdown and downside continuation in early July.

Price has traded down from the $10.50 per share level to the recent reversal pivot at $8.50.

The key focal point here is the strong initial upside movement away from the $8.50 level and the current breakout above the falling 20 day exponential moving average (EMA).

EMAs are preferred to SMAs particularly after a large gap event because EMAs place a greater weight on recent price activity, thus ‘hugging’ the price closer than a simple moving average which gives equal weight to all days (or bars) of data.

That being said, we’ll note the “Open Air” movement above the $9.50 region toward the falling 50 day EMA and opening gap level also near $11.00.

It will be an aggressive upside target that will be in play as long as price remains ABOVE the $9.50 level (the 20 day EMA).

Here’s a closer look at the reversal structure and initial breakout (hourly chart):

BBRY BlackBerry hourly chart breakout intraday trend reversal structure

Starting with July just after the breakdown event, we see an intraday (short-term) downtrend taking price from the $10.50 gap-down level to the current reversal up off the $8.50 ($8.60) level.

Note the divergence in volume with respect to the downtrend – generally if volume moves WITH price, we would expect a trend to continue (meaning lower prices on higher volume makes us expect lower prices yet to come), while if we see volume diverge with price (meaning lower prices on progressively lower volume), we would instead expect a future reversal to occur.

That’s what happened here with the initial movement up and powerful upside (and short-squeezed) gap action this morning.

Continue monitoring price relative to the 20 day EMA and prior swing highs on the recent intraday downtrend (seen above – $9.50 then the $9.90/$10.00 level) for additional upside action.

The spike in buy-volume when combined with the breakout event does suggest higher odds for continuation to the upside through “Open Air” as long as shares do remain above the $9.50 key pivot level (the focal point for today’s and the next few trading sessions).

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

Comments Off on New Life for BlackBerry BBRY Shares on a Breakout

Comments are closed.