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January 25 Chart of the Day - Dupont

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DuPont (DD) is making headlines this week for updating its outlook and downward adjusting financial guidance well below Wall Street expectations.  Price dropped like a rock yesterday in one of its largest single day sell offs. 

So we wanted to take a look at their chart from a price action technical analysis perspective to see what all the fuss was about.

On the monthly chart we can see that yes, the drop in price this month is very noticeable. However, from a technical perspective it turned out to not be all that surprising to us...

Why?

Because price was rejected (again) around the $80 level where it had fallen from 5 times in the last year alone.

Plus, we noticed a change control zone roughly between $60 and $67 with a mid point support/resistance level at $63.28. 

Change control zones are one of the five price action tools we teach when charting anything.  By definition, they are an area that represents where neither the bulls nor bears are in charge.  Price can slash though the zone with seemingly reckless abandon, price can respect the top or bottom from outside it or within it.  Or, price can trade aimlessly sideways within it.  When price breaks away from the zone it can often get drawn back to it like a magnet. And in this case we see all of the above are true.

Trading at $64.75 earlier today price once again found itself smack dab in the middle of its change control zone with a quick visit to the mid point. Shocker...

All kidding aside, down on the weekly chart we can see that price has been making a series of higher highs AND a series of lower lows... which means we can see a both a down trend and an uptrend occurring simultaneously.  At some point either the Dupont bulls or bears will win out but we can never know in advance what price will do...

So what's next? 

We don't make predictions...

Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.

  1. Support/Resistance
  2. Trend
  3. Fibonacci 
  4. Supply/Demand Zones,
  5. Change Control Zones

Take a look at the charts and let us know what you think.  

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