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October 30 Chart of the Day - Northrop Grumman

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Some analysts are raising their price targets and say Northrop Grumman (NOC) is a leading global defense contractor, providing systems integration, defense electronics, information technology, and advanced aircraft and space technology. The shares are a component of the S&P 500. The company has 95,000 employees.

On the company website it states "Whether it’s making a 200-ton airplane invisible, predicting cyber-attacks before they happen or solving the mysteries of the universe, wherever the boundaries of possible are being pushed, Northrop Grumman is there." 

The latter sounds way cooler to us!

Regardless of how the company is characterized wait until you see why its chart comes into focus today!

Trading in the low $470s this morning and well off its $556.27 all time high (ATH) we can see from a price action technical analysis perspective on the monthly chart that the stock's pull back from the summer ATH could be a simple "break and retest" of a multi year trend line.  Upon retesting the $420 area where price broke out from we can see that price launched back to the upside from there before meeting some structural resistance back up around the $500 level.

From here we dropped down to the weekly chart to further examine its price action. 

Using a "Validated Fibonacci" concept as shared in our FREE Fibonacci Guide we can understand a little better why price may have leapt up from its multi year trend line back test.  And that's because it was also the 50% bullish retracement on the weekly chart.

Nothing is ever guaranteed in the markets however, when we see multiple price action tools overlapping like this and providing potential "confluence areas" we then call it a "level of interest" within our trade planning.

With levels of interest, both investors and traders can develop trade plans that fit their respective styles.

So with $463 as a mid-point between the $420 and $500 zone we can see that price has quite a bit of history oscillating away from and then back to the $463 mid-point.

Ultimately, price may decide to eventually break away from this area for good but in which direction nobody can say with certainty.

Until then we'll continue to watch and trade/invest on the information that the chart provides, but never what the analysts say!

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.  

We'd like to hear from you in the comments sections.

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