Webjet Limited (ASX: WEB) is an electronic manager and marketer of travel and related services using in internet.
Yesterday a volatile price action may have generated a signal for a bullish move in the coming weeks. Indeed, the stock opened at $1.13, reached an intraday high at $1.30 and eventually closed at $1.20. We reckon that, despite the traditional weak volumes attached to this stock, the stock spiked during the trading session when it pushed up above $1.17. As the level is on the oblique resistance line, the breakout triggered quick and sharp buying signals.
Look at the chart: the oblique resistance line is built by lower high points posted since the historical high of November 2007 (point A, at $1.84). The lower highs were posted in December 2007 (point B), April 2008 (false break, point C) and September 2008 (point D).
Since November last year, the stock was on a bullish trend, backed by a support line (in green) that was built by higher lows posted since the low point posted in last November (point E, at $0.91). The higher lows were posted in December (point F) and more recently in March (point G).
As a result, a long-term indecision pattern has been built by both the resistance and the support lines. It is a triangle which has been narrowing within a range roughly between $1.05 and $1.17.
A break above the resistance or below the support was therefore expected. The price action of yesterday argues for “buy” signal and should trigger a further rebound. The MACD has triggered a positive alert last week by crossing above its signal line. The Money Flow Index, which measures the strength of money flowing in and out of a security, has also surged from an extreme low level.
We expect a continuation of the move on the upside, with a potential objective of $1.44 on the near-term. It corresponds to a previous high posted in September (point D) and may act as a new resistance.
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