Is Block Inc. accumulation phase now finally over after 2.5 years of bargain basement prices? I show below (not financial advice) the chart of Block and why I think there is an attractive probability that Block is now going to go through an up phase.
I have shown the chart dating back to effectively 2018. You can see the lengthy consolidation phase before the obvious covid dump.
Subsequent to the covid dump the price action did a moonshot from around $25 per share all the way to about $280 when the distribution phase of the market cycle happened. Smart money started selling into retail who were of the view it was going up forever.
After smart money finalised exiting their positions you see a steep mark down phase where price entered a reaccumulation phase. This phase has been continuing for well over 2 years where price has been depressed. I have highlighted on the chart an inverse head and shoulders pattern within this phase. Let us look at this closer.
To me, this looks like a classic inverse head and shoulders pattern, despite the price action looking a bit messy to reach the neckline for the left side of the right shoulder.
Inverse head and shoulders patters are classic reversal patterns. Given the length of time Block has had low prices while the overall market has been going up there is every chance that profits from the larger caps will flow into the mid cap equities.
Price has already broken out of the neckline and the image below helps to show whether there is any conviction behind this move by looking at volume.
The image is a snapshot of the activity in the right shoulder and more specifically the 'breakout'.
What is evident is that all the recent price action and strong upward move comes with a significant volume spike and this volume is corroborating the price move and therefore increasing the probability that the breakout is confirmed. Nothing is a certainty in financial markets, but this is definitely worth of consideration for deploying my only capital.
Price had broken the neckline with volume and then retraced back to the neckline. Then, a bullish elephant bar with significant volume pushed price to clear even the previous high of the initial breakout.
What do you think of this set up?
Trade Clearly!
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