Here is the current chart. 2/29/2011 All indicators up and volume building. We are heading to 22+ IMO. I'd noticed yesterday that the short position increased last week and the short squeeze could be adding momentum to this spike.
I too saw the cup-and-handle pattern about 10 days ago. It had symmetry and correct form to it...it's the "handle" I don't like.
Although RES is still in "the range", today's close was $20.02, just $.18 from the daily low and $.87 from the high. Reversal?
In the handle area, you'd like to see l-o-w volume...that didn't occur today; RES was down $.01 on almost 49% MORE volume.
RES remains 2.55% below the peak in the handle. Buy point is $21.58 according to the I.B.D. formula. Ten cents above the highest point in the handle. High volume in a handle concerns me.
Why is this a big deal? Let me tell you.
Look at a chart of IPXL, a stock I was following from July to early October, 2010. Look at the perfect and symmetrical cup! Look at the handle...almost perfect.
Yet, on the last day, just before a breakout would have occurred, IPXL crashed and burned...loosing 15% on that day on 146% increase in volume. Even if you had held on to enjoy the recent breakout, you had dead money in a stock for almost 4 1/2 months. If you'll notice the most recent action, IPXL has closed just $.20 off it's low on 75% more volume than normal.
Should RES resume its "handle", watch it as it goes through the $21.58 handle. Does it do so with conviction---at least---a 40% increase in volume? Is there an accompanying rise in stock price?
Lastly, watch it through the day, particularly after lunchtime; if RES begins to churn on higher volume, towards the close, without further price appreciation and begin to retrace on higher volume, it's a red flag for a failed cup and handle.