Xerox Corporation ($XRX) has been trending steadily lower since December, dropping over 20% in the last seven months…but more selling pressure could be seen ahead. Here’s why..
Lower Value Relationship
The daily chart shows $XRX has formed a bearish two-month Lower Value relationship, which occurs when the current month’s value area is completely lower than the prior month’s value area.
This relationship usually indicates that the market is finding value at lower and lower price levels, thus revealing a bearish trend.
During this type of bearish phase, every pull-back should be seen as a selling opportunity – so “sell the rips.”
Xerox has pulled back after reaching fresh lows and is currently showing initial signs of weakness at the monthly Value Area Low (VAL) at around $10.03. To boot, a bearish wick has also formed at this level, thus indicating initial selling pressure.
More weakness could spark another wave of downside movement.
The Game Plan
If price crosses (and closes below) today’s low price of $9.80, look to establish short positions, with a target between $9.14 and $9.30.
The average sell swing over the last three months has been .94, which means a target of about $9.14, but it’s usually better to take profits just ahead of the crowd – so use your own discretion.
This setup should remain in play so long as price remains above $10.20…otherwise, a close beyond this zone signals a broken setup.
Let’s see how this one plays out!
Hiatus
Sorry about my hiatus lately. I was extraordinarily busy the last 6 to 8 weeks and I’m finally seeing daylight. Thanks for your patience and I look forward to getting more content out to you on a regular basis.
Cheers!
Frank Ochoa
PivotBoss.com
Follow Frank on Twitter: http://twitter.com/PivotBoss
