Key Support Levels Define Downside Risk
Otherwise, consolidation could continue to develop and possible weaken towards a test of support near the recent higher swing low of $3.02. But since the 50-day moving average has risen above that low, it takes precedence as dynamic support. Therefore, if support near $3.12 is broken, the 50-day line, now near $3.05, becomes a target.
Range Compression Signals Potential Expansion
What is now becoming clearer is the continuation of range compression, which may be more apparent in the weekly chart. Although this week is not complete, the current weekly pattern is of a double inside week. The range of this week, so far, is contained within last week’s range and the range of last week fits inside the range before it. Range compression may be followed by range expansion and, therefore, momentum moves. This would suggest that although volatility is low, that could change soon.
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