The stock had broke out of a base in late '05, pulled back to the breakout point, and made a move in early '06 that measured 6 points from breakout. A negative RSI divergence formed and the stock took a nose dive over the summer.
The stock recovered at support in late '06, forming the same pattern we saw last year: A breakout in late '06 accompanied by a pullback to support, followed by a parabolic 6 point rise. We even have the the same RSI divergence.
Here's another doozy. Just as last time, we are around 3 points away from the 50 day moving average.
I will likely enter a short position if we see more strength in EWO. However, I will not trade the stock in the short term account I use for this blog. Shorter term, we still could see some upside. Any entry will be a position trade (I have a separate account for my intermediate term position trades) which I may hold for a few months, with a wider stop and target.
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