Traders are carefully watching a critical level in Old Dominion Freight (ODFL) which is setting up a possible breakout buy opportunity.
Let’s highlight this level, note the entries and targets, and possible play setting up right here right now.
Here’s the Weekly Chart for the Structure and Trend:
The main idea here is that the trend is up, ODFL shares are in a clear uptrend, and price is currently challenging the underside of the (flat) 20 week EMA just under $ 75.00 per share.
Note how price repeatedly bounce up off the rising 20 week EMA and then lately off the 50 week EMA.
We’ll see shortly that the $ 75.00 level is a key pivot where a bullish “open air” trading pathway opens above it while a bearish/cautious pathway exists on a possible movement down from $ 75.00.
The Daily Chart makes this clearer:
Just like we see price testing the underside of the 20 week EMA, price is playing into the underside of the 20 and 50 day EMAs as seen on the chart above.
Likewise, a bullish “Open Air” pathway is created above the $ 75.00 level which is the logic for a bullish trade.
The $ 75.00 level is the Midpoint of the sideways trading range between the $ 71 and $ 81 levels.
Simply stated, a bullish break above $ 75 suggests that shares can trade up toward the $ 80 level again to continue the sideways pattern (playing into resistance).
Of course, a failure here would target the $ 71 level as was the case with the same play at the end of January.
Finally, the Hourly (Intraday) Chart sets the stage for the open air pathway discussed above:
Price formed a clear and lengthy positive momentum divergence into the $ 71.00 level (higher frame support) and we’re seeing the logical and text-book reversal up off $ 71.50 now into the first target at $ 75.00 per share.
Once again, $ 75.00 will be our bull/bear pivot level for entering and managing trades.
For now, look to the $ 73.00 to $ 75.00 level as a “Neutral Bullish” Zone; an Alternate Bearish Breakdown Zone under $ 73.00; and finally our Bullish Breakout into Open Air above $ 75.00 (targeting the $ 80.00 level in a possible swing).
Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade