New Prescription: Short Allscripts

Sometimes a chart just begs you to take action.  That is what the chart below of Allscripts, ticker: MDRX, does for me.

There are so many negative indicators on this chart. Where do I start.  First, the last two candles show not one but two consecutive shooting stars, a bearish pattern when confirmed, with long shadows at the top of the candles.  Next, the last candle is also a bearish engulfing candle, completely covering the real body of the previous days candle and ending lower.  Third, the relative strength index (RSI), is into overbought territory and is starting to fall back lower.  Next, the price touched and rejected off of the the Fibonacci arc retracing the move down in November 2010. Fifth, the current price is at a historical resistance level noted on the chart 4 times when looking left. Finally, price is probing outside of the top of the Bollinger bands and has corrected downward when this has happened in the past.

Trade Idea: Short with an initial target of 20.14 at the trend line.

It has potential to go lower as there is historical support at 19.50-19.70 and then 18.38-18.50 below that. A good place for a stop would be the top of the last real body at 21.06.

Trade’m well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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