Trading idea for Computershare

by Michael Gable

Computershare is shaping up as a good little trade here - especially for those who are keen on trading this market bounce but wish to steer clear of resources. After rallying strongly during March, the stock has spent a good two months correcting back in 3 waves to retest the March breakout. We have now seen a piercing pattern on the chart as well as a reversal in the RSI. The combination of these two reversal signals tells me that this is a good probability trade. Stocks on our market often find resistance at the 50% retracement level, which happens to coincide with CPU's previous consolidation around $8.35. So if I was purchasing stock around these levels, I would wait for a rally towards $8.35 before writing a covered call to generate some additional income.

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