The chart below for Rambus Inc. (RMBS) shows the stock breaking below important support at the $12.50 level last August, from which point it devolved into a notable and distinct series of lower highs and lower lows creating a discernable downtrend line.
In early January of this year, price was finally able to close above said downtrend for the first time in five months.
As price progressed higher, the stock was able to close above initial resistance at the $8.70 level. That move above resistance was accompanied by a notable increase in trading volume as well. We believe the $8.70 level now has a reasonable possibility of functioning as new support. The stock's 50-day moving average was overcome, too.
Source: Worden
RMBS has now moved above secondary resistance at $9.30. This has also resulted in the chart having formed a higher low and higher high.
While there are some levels of minor resistance ahead, significant overhanging volume that would likely prove problematic does not appear until $12.50, in our opinion.
Tests of support may occur, but given that RMBS has violated a protracted downtrend line of notable length, closed above initial resistance on higher volume and created a series of higher highs and higher lows, we believe that RMBS may well have formed a "bullish reversal pattern."
At the time of publication, Ortmann had no positions in RMBS.