XING: Bullish Falling Wedge Breakout

(Click On Charts To Enlarge)

It's been awhile since I've posted on XING, an old favorite of mine. Since the Crash of July 17, 2007, below $12.00, it's been down...down...down...

Chart #1 Daily - Starting at the October 10 low of 1.50 (Blue #1), XING put in a weak Symmetrical Triangle that broke to the downside, below the dotted red line. I left Red #3 and Red #4 on the chart to illustrate how patterns often "morph," or change into something else. That Symmetrical Triangle pattern "morphed" into a two-month Bullish Falling Wedge, so we relabel it with Blue #3 and Blue #4.

We can see from the note on the chart that XING went up to the top of the pattern on December 2, penetrated it slightly (high was 2.35), and closed less than a penny below it. It sold off from there for two days, so the December 2 close was a trendline validation, validating it as resistance. Trendline validations can be meaningful because the market is telling us, "Yes, that IS resistance, and you're not getting through here!" Further validation of that resistance was the December 3 open of 2.30, smack on the trendline. That was the high on the day. Ms. Market said, "You DEFINITELY are not getting through this resistance!" LOL.

If the market later DOES get through that validated resistance, it "should be" significant, but be aware that there always is a "fakeout/breakout" possibility. Handle that accordingly with a stop. In this case, I personally would use a print below Friday's low of 1.97 as a stop. If XING should go back down there, reversing Friday's bullish candle and the bullish breakout entirely, I wouldn't be at all interested, and probably would say something like, "Curses!" LOL.

XING not only got above that validated resistance on Friday, it took out the December 2 high of 2.35 and CLOSED above it by one penny, at 2.36. Hmm-m...no guarantees, of course, but hmmmmmm-mmm...

Volume was lacking, so we'd want to see some buying interest come in, but that breakout puts targets of 2.74 (the top of the Wedge), and 3.65 (measured move) IN PLAY, as long as XING remains above the Wedge.

Math for the Bullish Falling Wedge measured move:

2.74 - High of the pattern
1.36 - Low of the pattern
2.27 - Where the trendline was on December 5, when XING broke out

2.74-1.36 = 1.38 points of upside added to 2.27 = Target: 3.65 IN PLAY




Chart #2 - Ichimoku Kinko Hyo - It means "At A Glance...The Table Of Balance." Don't be intimidated. It's just a simple visual, telling us if we're above the Kumo (Cloud), represented by the vertical lines, or below it.

We can see to the left of the chart that the highs of the Symmetrical Triangle in July and August tried to bang through the Kumo (Cloud) resistance, but those attempts were unsuccessful. The breakout was to the downside.

XING currently has had a breakout to the upside, but The Kumo (Cloud) still is overhead, so it's a breakout into resistance. That isn't as good as it would be if XING were trading above the Kumo (Cloud), so we must keep that in mind. It's a rally against the trend, but it also could turn out to be a "trend changing" rally.

Notice that the top of the Kumo (Cloud) currently is at 2.71, just below the first upside target of 2.74. On the first attempt to get through the Kumo (Cloud) resistance, stocks often get somewhere near the top of it, then pull back, so that 2.71-2.74 is an area where XING might run into some resistance if it can follow through to the upside on Friday's breakout.

Just for fun, if I could design a game plan for XING, it would be the following:

1. On Monday, sell off to 2.26, the top of the Bullish Falling Wedge and validate it as support.

2. Rally to/near 2.74, which is the first target and also the top of the Kumo/Cloud.

3. Sell off from there, establishing the top of an Ascending Triangle, or a neckline for a Bullish Inverse H&S (i.e., bullish continuation patterns).

4. Break out again, above 2.74, and head to 3.65 target. Notice that the low of the Symmetrical Triangle to the left of the chart is 3.76. When that pattern broke, it was almost a straight down affair, so there isn't a lot of horizontal resistance (congestion) between 2.74 and that 3.76 low. In other words, we've got some "head room" for a rally to that 3.65 target before we get to that Symmetrical Triangle resistance.

5. Continue higher to $20.00. Alright, Melf, settle down. Sett-ttle down ;)