Software company EPAM Systems (EPAM) hit an all-time high at $70.49 in April and pulled back to the 50-day EMA. An algo-driven washout marked the low, with price turning higher and breaking a five-week trendline on Monday. The stock tested the high and pulled back in Tuesday's session, and could now consolidate within the range of the six-day rally. The big sell bar damaged On Balance Volume, but it could recover soon.
The company has broad exposure to Russia and Eastern Europe. I wouldn't chase a new high, given the volume divergence, but a test at new trendline support looks buyable. The stock's history shows a number of washout days, increasing risk that we'll see that type of behavior again. While it isn't a trade killer, it does need to be considered in the reward:risk analysis.
For more market analysis from Alan Farley, sign up for The Daily Swing Trade, published Monday through Friday.