CAE (CAE-T) declined from $42.43 in November 2021 to $20.90 in October 2022 (A-B) and then settled in a bullish technical pattern known as a “W” (dashed lines). The recent rise above the neckline of this pattern (shaded area) signaled a breakout and the start of a new uptrend (C).
At the same time, the stock is currently overbought and far above the 40wMA. Since the average tends to act like a magnet, CAE may have a minor correction in price or time (horizontal trading range) which would allow the average time to catch up to the price, before resuming the uptrend. There is good support near $32-33; a decline below this level would suggest the start of a correction toward the 40wMA. Only a sustained decline below $30-31 would be negative.
After a correction, Point & Figure measurements provide an initial target of $43. The large “W” pattern supports higher targets.
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Monica Rizk is the Senior Technical Analyst of the Phases & Cycles publication (www.capitalightresearch.com). Chart source: www.decisionplus.com