In the updated daily bar chart of MU, below, we can see that prices held the $70 level until the middle of October. The shares dipped but managed to steady again and rallied into the beginning of December and climbed back above the 200-day moving average. Now prices are turning softer so we need to reevaluate.
Prices are pulling back and the On-Balance-Volume (OBV) line has turned slightly lower and the Moving Average Convergence Divergence (MACD) oscillator has crossed to a new take profits, sell signal.
In the weekly Japanese candlestick chart of MU, below, we can see two noticeable upper shadows telling us that traders are rejecting the price gains above $85. The 40-week moving average line still has a negative slope.
The weekly OBV line shows only a small rise from October to November and the MACD oscillator has crossed to the upside but is still below the zero line.
In this daily Point and Figure chart of MU, below, we can see a potential downside price target in the $75 area.
In the weekly Point and Figure chart of MU, below, we can see that the software is suggesting a price target in the $132 area, but we can see a fair amount of overhead chart resistance.
Bottom-line strategy: In this current market environment I would trade out of MU longs and stand aside. Prices could pull back to the $75 area but the bigger risk is a retest of the October lows. There are other trading opportunities out there.
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If prices bounce I don't expect the bounce to last too long.
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