Tracking a Reversal and Breakout Buy Signal Trade in DDD

A potential breakout buy (and short-term trend reversal) signal is developing in 3D Printing Stock 3D Systems (DDD).

Let’s start with the Weekly Chart and focus our attention on the key price levels (and targets) to watch.

The Weekly Chart shows a strong uptrend from 2012 until the January 2014 peak and sharp retracement back to the $45.00 per share support level.

The critical point here is the $57.00 and $58.00 price confluence of the 20 and 50 week EMAs (overlapping) and the yellow highlight which indicates prior price reversals from the past.

Note the green “Open Air” pocket that would become active should shares continue trading higher above the $58.00 and then $60.00 per share levels.

Upside targets (for swing traders) would extend to $70.00 then just above the $80.00 prior swing high.

We can see a “Rounded Reversal” pattern developing from the Daily Chart (and focus on the breakout trigger):

For shares of DDD, note the prior high from May into the $57.00 per share level.

Today’s price action took shares through $55.00 and into the recent target.

A simple continuation of the upswing already in motion would trigger a “Breakout Buy” signal straight up into the $65.00 per share level (it’s the 200 day SMA).

Note that a future swing above $65.00 extends the “Green Zone” or “Weekly Open Air Pocket” toward the $80.00 per share prior high price target from February 2014.

However, we do note the importance of the $57.00 and $58.00 price level as a possible reversal or resistance ceiling and will thus be cautious on any immediate failure to break above the current resistance.

Look to be cautious between $52.00 and $55 and otherwise bearish for a “failure” under the $50.00 per share region.

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

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