August Technical Analysis – EDC

July’s Commentary:

EDC passed through the short-term downtrend at $36, got back above the 50 day moving average, and then tried to take out the $40 per share level. In my opinion, EDC ran into some pretty stiff resistance, falling 15% in 3 days.

Technically, EDC is still range-bound between the low 40’s and low 30’s. Event-wise, the credit issues taking hold in Europe are not helping the emerging markets. If the up/down trend continues we could see a low of 30 before EDC heads north again sometime in late August.

A low of 30, huh. We may have seen that for 30 seconds or so. Short term resistance is now at 25, with EDC currently trading around 20 (which is awful close to the near term low). Don’t hold your breath…there isn’t too much (technically speaking) to hang your hat on at this point. We’ll see what happens this month, and hopefully September will have a little more info to go on.

On the plus side, EDC is still within it’s maximum 20-day price decline (%), so no need to adjust my position size based on volatility. However, I am tightening up my max loss rules portfolio-wise (I’m now using a max loss of $3,000 per trade, rather than 10,500). With it’s current price at 20, this means that I need to reduce my EDC position by 200 shares.

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About T. Knight
Blogging about my journey to financial independence via investing for cashflow.

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