Long-Term Targets and Pattern Extension Zone
In particular, the 200-day moving average was successfully tested as resistance with the $3.40 trend high. Therefore, it presents another upside target and is currently near $3.43. Also, there was a lower swing high at $3.49 from early March and it provides another higher target zone, not only because it is a lower swing high, but also since it was the beginning of a falling bullish wedge that initiated the current uptrend.
Typically, an initial target derived from that pattern is the beginning of the formation. Although this higher target may not be reached, its existence supports the potential for the 200-day moving average to again be tested as support at the higher price point.
Broken Trendline Retest Frames Larger Context
Underlying recent price action is the first pullback to test prior key dynamic support as resistance following a significant breakdown. In February, the long-term uptrend line was broken, leading to a continuation of the bearish trend and a low of $2.50 in April. The current advance is the first notable pullback towards the uptrend line to test it as resistance. The relationship to the 200-day average is similar, although it broke in early February, a little before the trendline. Once that process is complete, the larger bearish implications of the trendline break may reassert themselves.
