Ciena Corp (CIEN) has gapped sharply higher in today's trading. There was a slight pickup in trading volume in the days leading up to today's gap, but not an excessive amount to suggest that investors were anticipating the move.
The move seemed to be unexpected by some or many, but the big questions is whether this move up can see follow-through buying in the days ahead. Let's check our indicators to see if CIEN can breakout above $28, which is a key level on the Point and Figure chart.
In this daily bar chart of CIEN, above, we can see that prices have been trending higher over the past twelve months. The 200-day moving average line has had a positive slope since October. But look at the movement of the On-Balance-Volume (OBV) line -- it has been declining since September. For nine months sellers of CIEN have been more aggressive, according to this technical indicator. In the bottom panel is the Moving Average Convergence Divergence (MACD) oscillator, which moved above the zero line last month for an outright go-long signal.
In this weekly chart of CIEN going back five years, above, we can see that prices are above the rising 40-week moving average line. Today's price action is not drawn but it would put prices up at the 2013 highs. A weekly breakout above $28 would potentially measure to a $35-to-$36 price target. The weekly OBV line is neutral and the weekly MACD oscillator looks to be turning up to a fresh outright buy signal above the zero line.
In this Point and Figure chart of CIEN, above, we can see how the $27 level has marked the highs. A print or entry at $28 will be an important breakout in my book and yield a potential price above $30.50 that is on this chart.
Bottom line: If we only looked at price, we would be hands down bullish on CIEN being on the verge of a multi-year breakout. But we also look at volume and other tools, so we are going to be cautiously bullish. To be a buyer here, you will have to risk below $24.