This Breakout Move Is About to Face Its First Test

[Trading With Larry Benedict]( This Breakout Move Is About to Face Its First Test By Larry Benedict, editor, Trading With Larry Benedict Up until late October, Verizon Communications (VZ) had a miserable year. While the rest of the market rallied, the telecommunication conglomerate was stuck in a downward trend. From its peak on January 6 to its October low, VZ lost close to 30%. But after bottoming in October, VZ gapped higher off the back of its Q3 earnings. It beat consensus forecasts and announced solid customer growth. VZ has recently traded up around 27% since October 6. So let’s check where it could be headed next… Breakout Move The chart of VZ below shows a textbook downtrend in action. After its peak in early January, VZ made a series of lower highs and lower lows. The long-term 50-day moving average (MA, blue line) steadily trended lower: Verizon Communications (VZ) [Image] Source: eSignal As the chart shows, the reversals from those lower highs coincided with the Relative Strength Index (RSI) forming an inverse ‘V’ and tracking lower from overbought territory (orange circles). The 10-day MA (red line) crossing beneath the 50-day MA confirmed VZ’s later down legs. Apart from the brief spikes to lower highs, the RSI remained stuck in its lower band throughout most of VZ’s downtrend. It was unable to break up through resistance (green line). That’s a typical RSI pattern in a downtrend. And notice that VZ’s lower lows correspond to the RSI rallying out of oversold territory (lower grey dashed line). The bottoms in March and July came off the back of the RSI forming a ‘V.’ And in May and October, the RSI steadily trended higher. 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So that up-move could soon become shaky. What should we look for around here? Free Trading Resources Have you checked out Larry's free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. Switching Momentum For a stock to rally as quickly as VZ, it takes a strong surge in buying momentum. But it only takes a small reversal in that momentum to make the stock vulnerable to a pullback. And that is what we’re seeing right now… The RSI made an inverse ‘V’ and is tracking lower. A move back toward support (green line) could see VZ trading back around $36. After such a strong move, those who got in on the trade will become increasingly anxious about a pullback taking away their profits. So if the stock does look like it’s rolling over, they could rush to the exits, increasing the likelihood of a bigger move down. Regards, Larry Benedict Editor, Trading With Larry Benedict Mailbag Do you plan to trade VZ? Let us know at feedback@opportunistictrader.com. IN CASE YOU MISSED IT… Market Wizard Reveals: [The One Ticker Retirement Plan]( Introducing the “One Ticker Retirement Plan”… It’s a way to trade just one ticker… And potentially make all the money you need – no matter what happens in the stock market. Sounds too good to be true? [Larry reveals everything in this interview – including the name of the ticker you need to get started.]( [image]( [The Opportunistic Trader]( The Opportunistic Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.opportunistictrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. The Opportunistic Trader welcomes your feedback and questions. 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