After pulling back as low as $11.36 today at its 50 day MA, MGM strongly bounced back up to trigger a BUY SIGNAL as it recovered all of the past days' losses. MGM closed higher today at $12.52 on strong volume and has now formed a Bullish 3 Method Formation which is a continuation pattern of the current up trend.
"The psychology behind this pattern is relatively simple. The first candle represents strong impulsive buying with high volume. The consolidation bars do not show any real selling but conversely allow longs to buy more of their positions while the stock drifts lower. Finally, when the longs are done accumulating their shares, the downward pressure is released and the stock is allowed to go higher, above the first candles high." (source: http://www.mysmp.com/technical-analysis/rising-and-falling-three-methods.html).
"The Rising Three Methods bullish continuation pattern occurs in a bull market, where during an uptrend the market rests before resuming the trend. The bullish trends break is reflected by small candles that all stick to a strict market range formed by the aggressive move on day one. A typical explanation for this type of formation might that the market is slowly digesting the relatively large moved reflected by day one." (source: http://www.fxwords.com/b/bullish-rising-three-methods-candlestick.html).
"Bullish rising three methods pattern is considered as a highly reliable trend continuation pattern. Reliability of the pattern increases with shortening of real-bodies (doji formations) of middle candlesticks and decrease in trading volumes of middle days." (source: http://www.nobletrading.com/blogs/2009/01/bullish-rising-three-methods-pattern.html).
I now feel very optimistic of seeing MGM finally going over $13.00 this week and perhaps as early as tomorrow. I feel a breakout on the up side for MGM is now imminent. As mentioned in earlier posts, a closing above $13.00 will trigger a STRONG BUY SIGNAL at which time we may see it move towards $17.00 and $22.00.
LONG MGM
