China Agritech Inc Pulls back to the bottom of the broadening wedge formation

China Agritech Inc CAGC has pulled back all the way to the bottom of its broadening wedge formation and it did it a lot sooner than I thought it would.  I indicated in a previous post that China Agritech has a habit of being just as volatile on the downside as to the upside.

CAGC was way overdue for some type of pullback given its recent 130% super move in just a month and a half to the upside.  Then some insiders started selling and I believe gross margins started to slip a little bit and so people started dumping shares.  It is probably a true statement to say that when any company gets near a 500 million dollar market cap it enters a new juncture where it must prove itself and show that it is ready to enter mid cap land and be able to continue to sustain growth despite the competition.

I don’t know whether this will be the case.  But I do know that CAGC has touched the falling wedge support and so far today has shown a nice price reaction off of this support.  The recent two candlestick bars also appeared to be a morning star candlestick pattern which is a reversal pattern.

Ideally, CAGC will pull back tomorrow within today’s candlestick and create some type of reversal bar to set up a better opportunity for the long side.

I don’t believe CAGC will just touch this bottom supporting line just once like that.  Usually there is a little bit of give and take before you get a true reversal going.

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Key important upcoming resistance is the 23.03 level.  Breaking back above and through there could be a sign that CAGC is ready to head higher in a new uptrend again.

Posted in China Stocks, Stock Setups
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