(Click On The Charts To Enlarge)The Weekly Chart gives us the best visual illustration of the technical difficulty that XING had this week. The neckline of the Head & Shoulders Top was broken on July 17, on a gap down from 13.97 to 11.28, on the news that XING would have to restate financial data for 2003-2005.
On any rally, "former support should be resistance," and much of that depends upon how large the pattern was, and upon how much time the stock has spent forming a new base, prior to an attempt to get back above the resistance.
In the case of XING, the top was of 10 months duration; the base prior to attacking the neckline was only about two and half months, so "former support was resistance" on this week's "Gap To Crap" opening, at 12,29.
The Daily Chart turned short-term bullish on September 20, when XING printed 9.99, taking out the middle of the "W" bottom. From there, the stock continued to "act bullish," and all of the bullish targets got MADE.
Since the reversal from 13.38, XING has been between the proverbial rock and a hard place. It couldn't close back above the 11.95-11.94 Cup & Handle breakout (former resistance should have been support, but it wasn't), nor could it break below 10.53-10.50 short-term support.
On Friday, that short-term issue got resolved in favor of the bears, with the following information:
1. XING needed to break above 11.97 for a "higher high" coming out of the Descending Triangle. Friday's high was 11.969 in early trading, then the selloff began.
2. 11.95-11.94 Cup & Handle support, again, was no support at all.
3. XING reversed back into the Descending Triangle, confirming the breakout failure.
4. The trendline (red diagonal) coming off the 7.65 low was a validated trendline, meaning that it had been tested, and it had held. That trendline came in on Friday at 11.63. It got penetrated slightly in the high 11.50s, XING tried to hang on to it in the low 11.60s and stage a late afternoon rally, but that failed.
4. The trendline (red diagonal) coming off the 7.65 low was a validated trendline, meaning that it had been tested, and it had held. That trendline came in on Friday at 11.63. It got penetrated slightly in the high 11.50s, XING tried to hang on to it in the low 11.60s and stage a late afternoon rally, but that failed.
5. 11.53-11.50 short-term support fell very quickly thereafter, and XING slid to a gap fill of 11.19, and slightly below it.
6. MACD in the daily chart crossed below its signal line.
So, what have we got?
1. A failure in the weekly chart at the open last Monday (resistance at the neckline)
2. A failure in the daily chart all week (the top of the Cup & Handle breakout wasn't support)
3. A failure in the hourly chart on Friday (the Descending Triangle was a "fakeout breakout" that resolved to the downside).
On any rally early this week, resistance levels are:
11.50 - 11.53 - The bottom of the Descending Triangle
11.80 - The up trendline (red diagonal) off the 7.65 low
11.94-11.95 - The failed Cup & Handle Breakout
11.97 - The top of the Descending Triangle failure
On the downside:
10.77 is IN PLAY from the Descending Triangle failure and breakdown.
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