A bit of history focusing on a daily chart from March 7th 2013 to June 7, 2013.
March 7th - pre-earnings regular session high 6.97, close 6.72. Earnings after the close raised price even higher on heavy AH volume but a few minutes into CC poor guidance whipsawed it to the downside on heavier AH volume.
March 8th - dropped from the previous regular-session close 25% to a low of 5.06 on 7.45M shares. Except for the first day of public trading it was the heaviest volume ever. However, the churn, or the ratio of the volume to the day's price range (excluding the gap), was the highest ever. Therefore suspected this was the Selling Climax. The number of shares short were significantly reduced after this event. Important to remember that high volume lows get retested; $5.06 would prove no exception.
March 9th - popped to midrange of the previous day's bar; selling was done. Consolidated an additional 5 days inside the March 9th bar.
March 19th - Automatic Rally with catalyst of Bloomberg stock-buyback pseudo-news. Someone wanted higher prices to sell in to, and it was well worth it to pay for this psuedo-news article. Price popped to a high of 5.84 and slid back down in the following weeks trapping many sheep. The trading range, TR, is now established; 5.06 to 5.84.
April 26th - The Test of the 5.06 high-volume low; 237k vs 7.45M shares with a doji close.
April 27th - a bounce to a 5.37 high on 937k but closed below midrange just under the 20MA.
May 1st - a Spring to a low of 4.80 on 1.37M shares. Scared out many sheep; a run thru the stops.
May 2nd - a Bullish Engulfing on 808k back into the TR and then up again May 3rd but with a close below midrange and under the 20MA. A 4.80 test needed.
May 6th (Monday) - a 4.86 secondary test of the 4.80 low on 810k vs 1.37M.
May 7th - a Bullish Harami (pregnant woman) candle and on May 8th a confirming green bar to start a rally peaking at a high of 5.70 on May 15th with a shooting star doji
Good analysis, thanks OP. Very interesting to see the logic behind your recent buy in. Been reading a bit about the various candles etc. on stock charts dotkom so this is helpful to put that stuff in the perspective of a stock that I'm already watching daily.
May 16th - retraces with a bearish-looking engulfing candle to a low of 5.17 but the volume was light especially considering the large price move down; the churn was very low, indicating no follow-thru selling despite closing near the low-of-day. Closed just below the 20MA and in a thick nest of historical support. But who would buy this bar? Big and red which took back 4 days of gains with nary a bottom tail. If it had had a decent tail the sheep would have bought it given the low volume. So look what happens the following days beginning May 17th, the rally continues with 3 white soldier candles. This action, designed to keep us nickel and dimers out, tells me big money may be ready to move the stock out of the TR (5.06 to 5.84).
May 21st - Price reaches to 6.10; an AB=CD measured move completed. A=4.80, B=5.70, C=5.17, D=6.07. It closed at 6.00, above the TR (5.06 to 5.84). But the following day, May 22nd, the funds and specs fail to take the ball and move it higher. It falls back into the TR with a big red retracement followed by green day with a low of 5.57 and then another 10 days of low-volume chop, indicative of retracement action which brings us to the last couple days of trading. This retracement, this chop, was necessary to work off, to consolidate, the 27% gain from the rally between 4.80 and 6.10 and to build cause for the next leg up.
June 6th - started out looking bad; another relentless red day falling just below the 50MA to 5.31; one penny above a 61.8% retracement between 4.80 and 6.10; a normal retracement. And then it rallied to close green printing a bullish hammer. The hammer needed confirmation, a follow-up green day, which came in this past Friday.
June 7th - gapped up, very bullish confirmation of the previous hammer candle but then it came down, and then right back up to print another hammer confirming a bullish trend. The close of 5.55 is sitting right under the 5.57 resistance which was support of the previous chop. But the fact that the price did not back away from resistance means there is a good chance it will bust back into that low-volume chop range Monday morning or it may need to build more cause. The more cause the higher it can go. If it can get back into the chop range then the chances are good it will run back up to test the bar of May 21st with a low of 5.81 and a high of 6.10.
If it can get over 6.10 with more than 832k the funds and specs should pick up the baton and run with it, then we're off to the races This is where it will need a little positive propaganda.. The long term AB=CD of A=4.80, B=6.10, C=5.31 gives a D point of $6.61; 19% higher from right here.
If we look back in the chart to see what was happening in the area of $6.61 we can see that the low of the swing-high bar of March 7th at a price of $6.60. Do you remember March 7th, where this story began?