Every chart should be given a grade, if for no other reason than it’ll require you to evaluate the entire situation and make a decision. Should it be traded? Should it be watched? Should it be avoided?
Looking at the chart of F below, this one earns an ‘F’ on recent behavior as well. Here are several reasons why:
- Lower highs are still in place. This one has been trending lower since the April high, with every bounce getting sold.
- For the past 2 weeks, the broad market’s bounce from the June lows has been far more impressive than the rebound in F.
- Volume on the recent bounce has been lackluster to say the least, with upside volume continuing to diminish. That shows very little participation on the buy side.
I’m watching F for a trade on the short side, and there’s a well-defined rising trend line  that I’ll be using as my pivot. The last rising trend line was broken with a sharp move lower, and while this trend line isn’t quite as steep, I still like the potential for a new leg down starting if it gets broken at $11.45…and particularly if it happens on increased downside volume.
F could instead rally from here, in which case I’d simply avoid it. This one looks relatively weak, and the confluence of poor technical conditions lands it on my radar as a short candidate.
Here’s a closer look for you:
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