With multiple breakout signals and strong support in place, it is time to re-enter Enbridge (ENB). This has been a fantastic trend for several years and so far the recent correction has simply moved price from the top of the range down to the bottom. There is a very strong support band in place between $42 and $39 from the 8-month trading range in Mid 2012; prices have recently tested this support band, as well as the 4 1/2 year uptrend support. This anchored support zone gives us a very clear invalidation point to our entry and a low risk way to continue following this monster trend. With big trends like this, you want to be a buyer at the bottom of the channel and a seller at the top. Buy support, sell resistance. That is what we have done in the past and will look to do this time as well.
Along with the support base to trade against, we seem to be seeing some positive momentum come into the stock here as well. There has been a heavy accumulation of shares over the past month as price has tested those support levels. This shows institutional investor interest at these levels and that helps provide a floor under the price. ENB has broken above the 6-month downtrend resistance and seen nice follow through after the breakout, as well as heavier than normal trade volume (which signifies more confidence in the breakout). The last six trading days have not been kind to the stock, but have been kind to our entry level. We are now seeing prices pullback into the rising 20 WMA and it offers a great place to buy some shares.
If the stock fails to hold this downtrend breakout and the support zone is broken, we will step aside.
Long term uptrend intact and looks poised for another leg higher.
Closer look at breakout and support levels. Buy volume has been very strong the past 2 weeks.
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