|OMC Daily Chart|
With horizontal support and resistance straddling today's long candle, a potential trade in either direction is likely early this week. Normally, a descending triangle tends to break to the downside, and the fact that we entered this triangle from the bottom increases those odds, but when we look at the weekly and monthly charts, we'll see that the intermediate and longer term patterns favor just the opposite.
|OMC Monthly Chart|
The monthly pattern is riding the rails along the resistance line in a channel that dates back to 2009. Not surprisingly, if Wave-III is truly approaching its terminus, the RSI(9) oscillator is showing a bearish divergence. Still, from a monthly perspective, we're not yet seeing signs of the reversal that will mark the start of Wave-IV, although all of the Elliott Wave targets have been satisfied.
|OMC Weekly Chart|
The current direction on the weekly, however, is up, not down, and that's what we truly needed to learn from the two longer term charts.
We already alluded to how we plan to trade this stock. We'll take a long position on a breakout to the upside - something which is poised to occur in the next day or two. Our protective stop will be just below the triangle support line and our price target will be just above $92. If, however, we get a bearish reversal, tomorrow, we'll hold off entering any positions until we get a subsequent break either above or below the triangle. It's the triangle pattern we're looking to play in this stock, so let it show us which way it wants to run.