Watch this Stock for a Breakout
November 5, 2010 in Analysis
Raytheon Co. ($RTN) has been trading within a well-defined range over the last three months. However, price is now holding right at resistance in anticipation of the next breakout move. Here’s why this stock could get a big breakout soon..
Double Inside Day Formation
Raytheon has formed a unique Double Inside Day relationship, whereby the prior day’s range is inside that of two days ago AND the range from two days back is inside the range from three days ago.
In essence, this three-day formation usually leads to a major breakout opportunity in either direction.
Watch the outer boundaries of yesterday’s range ($48.20 up, and $47.60 down) for signs of directional confirmation.
Eventually, a breakout from this range could spark the next 3 to 5 day move.
Confluence of Resistance
The fact that price is sitting beneath a confluence of resistance (H4 Camarilla pivot, R1 resistance (not shown), and visual resistance) indicates a breakout in either direction could be extremely powerful.
However, given the overall bearish nature of this stock since April leads me to believe a downside move is the most likely scenario.
Keep an eye on resistance, as a move away from this zone could be quite nice.
Let’s see how this plays out!
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