If you’ve ever wondered about the power of support and resistance based on price action, then look no further than Duke Energy which has seen its efforts to rise repeatedly brought to a halt as the very well defined ceiling of resistance at $91 comes into play, time and time again. However, it is this aspect of technical analysis when combined with an understanding of volume and price that its true power is revealed and in particular during late April and early May.
At this time there was a further attempt to breach this strong region of price resistance as denoted by the blue dashed line of the accumulation and distribution indicator which develops these lines ever thicker, the more they are tested and so give a clear signal of both strong and less strong levels. Late April saw this level tested once more, but note the volume associated with the two green candles – it is low to average on both. The price action itself suggests weakness with the deep upper wicks to the candles, but with the volume confirming the lack of buying, the resistance level simply adds yet further confirmation to this already weak picture.
Last week’s price action once again was on average volume suggesting this weakness remains in the ascendancy as the stock trades around the $88 per share price. Below there is little well-developed price support with only weak potential platforms at both $87 and $85.80, and with low volume nodes on the Quantum volume point of control indicator for NinjaTrader extending down to the $83 per share area, this looks likely to be the next stopping point in the longer term. Moreover, with the trend monitor now in a transitional phase of dark red, the outlook for Duke does not look encouraging.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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