Don't Ignore This Chart!

Infinera Breaks Descending Channel On Heavy Volume

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Infinera (INFN) gapped higher in February on massive volume, but has been falling in a descending channel ever since.  Volume accelerated on Friday as INFN clearly broke this down channel.  The reversal also is taking place after a key gap support level was filled and tested.  Take a look at the chart:


The two blue arrows highlight the problems associated with the last two attempts at a trendline breakout.  In the first case in early May, INFN showed heavy volume that accompanied a reversing candle and false breakout, a bearish signal.  In the second attempt, note that the trendline was broken, but volume was average at best.  On Friday, however, volume expanded as INFN easily broke its downtrend, arguing for higher prices in the near-term.  A bullish MACD centerline crossover would be another technical signal to watch for.

If there's one problem with INFN, it's the longer-term weekly chart.  Even after Friday's gap and near 9% gain, INFN remains 60% beneath where it was in August 2015.

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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