Shareholders in telecommunications company M2 have had a great year. The owner of the iPrimus and Dodo brands has nearly doubled in value since the low in April 2014.However, traders thinking about taking profit might be interested in the latest chart pattern.
M2 has formed a 3 drives to a high pattern as outlined on the chart below. Harmonic pattern traders see this pattern as signalling a potential peak and the beginning of a downward move.
The RSI momentum indicator in the box below the chart is providing another warning signal. It’s been diverging with price, making lower highs while price is still making higher highs.
Another possibility here is a couple of more bounces off the support and resistance lines. This would confirm a rising wedge pattern. Either way, a clear break below the support line would now indicate a potential downward correction in this stock. For good measure the 20 day moving average is tracking close to this support line adding weight to its potential significance