Athenahealth Check Up in 3 Timeframes

• Posted by Greg Harmon
• on February 9th, 2011

I first noted this stock in a January 18th article, A Prescription for Every Time Frame (link below), where I stated it may need some time to be ready. Well now looks to be that time. Let me explain why by reviewing its price action going from a weekly timeframe down to the daily and then a 30 minute timeframe.

Here is the weekly chart. The first thing to note is the long broad channel going back to its second week of existence. This channel between roughly 22 and 47 is what first caught my eye, but there are other positive features. First The Relative Strength Index (RSI) remains pointed higher as price is piercing the upper bound. Next the Moving Average Convergence Divergence (MACD) indicator is rising again after falling off slightly. The trend is clearly higher since July. One final note on the weekly chart to get your attention, technical analysis would teach that the target of a move off of channel break would be equivalent to the width of the channel. That would place a long term target at 72. Now look at the daily chart below.

This chart reveals that the break above resistance (refined to 47.40) is the second time in 3 weeks. Also the volume on this each break was relatively larger but not so large as to signal a deluge of selling. The RSI on the daily chart has been in bullish territory since mid August but is recently rising off of the mid line as it is breaking the resistance level. The MACD is also becoming positive and crossed higher. The Bollinger bands are starting to expand on the move higher also. The candle printed on this latest break is the only dark spot. The solid black candle shows that despite being an up day, that the intraday price action was actually bearish, closing below the open. That being said it did retest the resistance level and held above it which is positive. This stock looks ready. But what about the short term. Below is the 30 minute time frame chart.

This chart shows that the stock opened gapping higher Tuesday before having some selling pressure at 50 and retesting the previous day’s levels. By the end of the day it was only briefly below the resistance level at 47.40 and closed higher. During this intraday action the RSI never went below 50 either. This stock looks ready for the assault on higher ground. If you have a shorter time horizon then look for another test of 47.40 as an entry. If your horizon is longer term then perhaps confirmation of a weekly close above 48 would be you r entry. But either way, keep a sharp eye focused on this stock as it is ready.

A Prescription for Every Time Frame

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