MGM is turning out to be a technician's dream with its almost perfect symmetrical triangle.
Given the current general market sentiment, the bias is to the downside at this moment.
MGM currently has support at the $13.50 support. This support is very significant as it was once resistance before the stock surged to its high of $17 in Jan 2011. See how the price action tested the $13.50 area at pt A, B and C before eventually breaking through its resistance. The more times the price action tested the resistance line, the more reliable it becomes. Technically speaking, this is a really import price area which we should watch out for.
Having said that, a break below to the blue spot would signal a strong sell especially since the price action is currently residing below the Ichimoko Clouds. Should MGM break lower, it should see support at the $12 - $12.50 level where the 200day MA is located (see circle). A break below the 200MA could see MGM testing $11.
However, let's not look so far ahead and concentrate on the probable short term movement of this stock. This short selling trade has the potential to net the short seller a $1 profit. I will be placing a "short sell" stop at the blue spot on the below chart. The stop would be triggered immediately once the price action plunged past the area. Another reason why this blue spot is so significant is because traders who are long based on this pattern would place their stop loss at the level of the blue spot. A pierce through of this area would trigger many stops along the way.
Given the current general market sentiment, the bias is to the downside at this moment.
MGM currently has support at the $13.50 support. This support is very significant as it was once resistance before the stock surged to its high of $17 in Jan 2011. See how the price action tested the $13.50 area at pt A, B and C before eventually breaking through its resistance. The more times the price action tested the resistance line, the more reliable it becomes. Technically speaking, this is a really import price area which we should watch out for.
Having said that, a break below to the blue spot would signal a strong sell especially since the price action is currently residing below the Ichimoko Clouds. Should MGM break lower, it should see support at the $12 - $12.50 level where the 200day MA is located (see circle). A break below the 200MA could see MGM testing $11.
However, let's not look so far ahead and concentrate on the probable short term movement of this stock. This short selling trade has the potential to net the short seller a $1 profit. I will be placing a "short sell" stop at the blue spot on the below chart. The stop would be triggered immediately once the price action plunged past the area. Another reason why this blue spot is so significant is because traders who are long based on this pattern would place their stop loss at the level of the blue spot. A pierce through of this area would trigger many stops along the way.
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