SIRI 10/3/2013 – Looking Back At Resistance Levels For Sirius XM Radio’s Share Price


I wanted to take a look backwards this time rather than always trying to project forward. Sometimes history as old as 10-20 years may matter on a chart, like I pointed out in this update on the indices. Knowing what the chart is going to do “in the long run” helps investors make better decisions in the short-term.

 

So in this update for Sirius XM Radio (SIRI), I am going to start by taking a look backwards at a 10 year weekly candlestick chart. I have drawn several trendlines on the chart representing support and resistance areas. Let’s take a look.

Sirius XM Radio (SIRI) Stock Chart - Using a 10 Year Weekly Candlestick Chart to Identify Previous Support and Resistance Areas

Sirius XM Radio (SIRI) – Using a 10 Year Weekly Candlestick Stock Chart to Identify Previous Support & Resistance Areas

 

Most of the support and resistance lines on the above chart are approximately $.50 apart. SIRI is currently above the $3.75 support line and should face resistance around $4.25, $4.75 and $5.25 during its uptrend.

 

One way to get through a resistance area is with increased volume. As SIRI approaches a resistance area, I am watching to see if volume is accelerating or decelerating to help clue me into its next move.

 

That next move that SIRI’s share price could make could either be busting through a resistance area on heavy volume and then advancing towards the next resistance area, or bouncing back down to the nearest supporting trendline. If bouncing down is the next move, I want to see it happen on light volume which indicates a lack of any real selling pressure.

 

After the $5.25 resistance area on the above chart, the resistance lines seem to be spaced approximately $.75 apart rather than $.50 apart leading up to the $5.25 area. This is caused by the rising share price – it takes larger dollar moves to equate to the same percentage moves.

 

In order to get to the $4.25 mark and beyond, I would like to see SIRI regain control and continue to close above the trendline as shown on the next chart.

 

Sirius XM Radio (SIRI) - Trying to Recapture and Hold Its Trendline

Sirius XM Radio (SIRI) – Trying to Recapture and Hold Its Trendline

 

 

Disclosure: I am currently long shares of SIRI with a $3.87445 cost basis. I will be looking to purchase additional shares on any weakness in the near-term.

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