The Chart of the Day is Potash Corporation of Saskatchewan (NYSE: POT).
On Thursday, the stock bounced on high volume off the short-term uptrend line that started in July 2010 for the fourth time. The bullish implication of this rectangle chart pattern is a continued move higher to the target area of $165 to $170. If POT can close above the pivot of $144.78, that would also be a bullish signal.
Traders should look for resistance at $147.27 and $148.73. After that, there’s no significant resistance until $153.29.
With a rectangle chart pattern, the narrowness of the trading range can also be used to gauge the breakout. Typically, the smaller the difference between the upper and lower boundary, the stronger and more reliable the breakout is considered.
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