Chart: CSCO, Daily
From the beginning of the year 2013 the price of Cisco Systems shares was moving sideways in a 2 dollars range, between 20$ and 22$ levels.
After they have announced above expectations earnings for their last quarter the price gapped up about 10%, opening at 23.50. From here it started an up move but quite anemic as we can see. On a smaller time frame the move would resemble very much with a Rising Wedge.
This is not all. Leaving aside the price action, we also observed that the volume has spiked right at the opening after the gap and was quickly tempered down. The 14 days RSI moved above 70 level and after that started to create a negative divergence between its evolution and the price action.
Our setup it is based on a drop of the price under 24.00$ with a target near the ex-resistance level and the stop above the current high. If the next candles will close above 25$ per share we can consider this setup invalidated and look for other setups.
Confirmation Level: 23.98
Target Level: 21.80
Stop Level: 24.80