In addition, the 100-day moving average is close to converging with the downtrend line, adding to the potential significance of this resistance zone. It marks a significant pivot zone since a rally above the downtrend line and the 100-day moving average would be a sign of strength and could result in a recovery of the recent lower swing high at $94.34, which would further confirm strengthening. A sustained move above that swing high would provide another bullish confirmation and strengthen the case for a continued recovery.
200-Day Average Provides a Foundation
There is also the test of the 200-day moving average as support that occurred with the most recent decline. A reclaim of the 200-day average occurred during the last advance that followed the July swing low of $67.73. Confirmation of support at that long-term trend indicator supports a short-term bullish outlook. It also provides an important foundation for the current recovery.
A Larger Recovery Depends on Resistance
A decisive rise through the upper downtrend line would be a sign of strength. If sustained, it may result in a recovery of the July lower swing high. That would set the stage for a possible challenge to the resistance zone near recent highs that followed the sharp advance in March. In this context, the current pullback is important in that the wedge breakout could be the next stage of a larger recovery.
