Upside Action or Cold Downside in Activision Blizzard

• Posted by Greg Harmon
• on March 12th, 2015

Sometimes you just have to be ready for anything. I live in the suburbs of Cleveland and this time of year is a good example of this. The weather is starting to turn and getting into the high 50’s again for the first time after another brutal sub-zero temperature winter. It feels great to be outside without 4 sweaters, a hat, gloves and a jacket on.

But historically it snows in this area at least until mid April. So next week could bring more 10 degree days and a foot of the white stuff. This is good preparation for learning to be flexible. And can be directly applied to the current chart in Activision Blizzard ($ATVI).

The chart above gives the duplicitous set up. On the downside the price action completed a bearish harmonic pattern when it reached a 88.6% retracement of the XA leg at point D a few weeks back. This pattern then looks for a pullback of at least 38.2% of the pattern, or to 21.72 and possibly 61.8% of the pattern to 20.19. It could still continue to this range. And the 50 and 200 day SMA below at 21.50 is another natural target.

But then there is the case for a reversal higher. Let’s start with those SMA’s. they are actually printing a Golden Cross, with the 50 day SMA moving up through the 200 day SMA. This is a bullish signal. There is also the fact that the RSI has continued to be bullish and is now leveling.

Nobody knows what will happen with this stock price tomorrow or next week. But these trading set ups suggest that a move over the yellow box, indicating a reversal back higher can be bought, while a new low under the box can be sold to capture a move lower.

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