Take a look at the 1-year chart of Bonanza (NYSE: BCEI) below with my added notations:
For the most part, BCEI has been trending lower for the last 7 months. However, during the most recent 4 months the stock has had a tendency to create key price levels at the increments of $5 (blue). For example, the current level of resistance is $30. Next, you can see that $35 was the previous support back in October and November, while recently the $20 and $25 levels have both been hit as either support or resistance.
The Tale of the Tape: BCEI is approaching its key level of $30. A long trade could be made on a break above that level with a stop placed under it. A short trade could be made at $30 with the expectation of a fall down to the next $5 level at $25.
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