Boston, MA 09/24/2014 (wallstreetpr) – AbbVie Inc (NYSE: ABBV) (Closed: 57.56, Down: 1.96%) opened with a huge gap down on Tuesday as it came into the spotlight after its tax inversion deal with Shire PLC (ADR) (NASDAQ: SHPG) came under fire from the US treasury. A recovery from the lows improved the structure of the daily candle, with the close considerably higher than the open, but failed to end the day with a positive close. The volume rocketed at 24 million against an average of 11.7 million on this news-driven day.
Interestingly, the previous top at $58.27 in July was formed with exactly a candle like this, forming with a big gap down. In that case, a pullback tried to fill the gap in the next 2-3 sessions before resuming the fall and the stock dropped to $51.82 in the next 3 sessions. A similar occurrence now would result in a drop to $54-55 area and then a consolidation in the range of $54-$57 roughly. Will it happen this time? Fractals have no certainty, but when they happen, work considerably well.
The indicators do not bode well for the stock as the daily RSI is coming off the overbought level and has a lot of room on the downside left. MACD Histogram is showing negative divergence with the current value very close to the zero level and a crossover to the negative zone may accentuate the bearish momentum. Simple MACD is coming down too from the overbought area and may give a bearish crossover in the next day or two. All of this suggests a possible testing of the 50 day moving average at $55 and even a test of the 200 day moving average at $52 levels can’t be ruled out.
The weekly chart shows major support near $52.80 and then $50 levels. So the investors could wait for an entry in the stock and use any dip to $53 to buy it.
