ZHNE Zhone Technologies Stock’s Volume Behavior Implies Potential Game Changing Event

by Olivier on September 8, 2013

Quick strong stock chart trading idea to keep on your radar for a potential break out to the upside. Although ZHNE – Zhone Technologies is a beaten down stock trading nowhere near its all time high it has put in a decent basing pattern and recently displayed a huge volume spike indicating interest in the stock has drastically increased. As you can see on the chart the increase in volume was accompanied by a gap indicating a sense of urgency from market participants to get into the stock no matter what. This has ‘break away gap’ written all over it. Put another way: Buyers are now in control. If this is indeed a break-away gap it means the gap won’t get filled anytime soon. I already have a position as sometimes I am willing to anticipate a break out to the upside. The correct play though is to wait for confirmation and the stock to resume its recent uptrend by breaking out of the flag pattern. If the up-trend continues I will most likely add to my position.

You know the drill. Thrusting move – consolidation pattern – resumption of the trend leading into the consolidation pattern. A technical analysis classic which is actually one of my favourite patterns to trade. The bullish A-B-C pattern.

The compressed chart view best displays the stock’s great potential going forward.
Click on the chart to maximize:


Trading is not an intellectual game. You can’t ‘out-think’ the market. – Linda Raschke

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