Prior analysis of Brocade led to a small upward move towards its near term target 6.31 shown in this chart. The stock has underperformed its expectations so far. Even as it broke higher out of the prior correction, it only traded to 6.18.
Although this prior wave scenario hasn’t yet resolved itself compared to expectations, currently BRCD is trading at a 38% retracement level of a longer term trend and provides new targets that correlate closely with old.
This trend can be measured from 4.86 on 9/10/10 to the recent high of 6.18. The magnitude of this price spread can be projected to be a wave 3 of an internal wave count shown in the chart below. Wave 1 of this trend is measured from 4.86 to 5.50 on 12/10/10.
Prior price targets and Brocade’s current trend will likely be resolved into earnings this Thursday night. Large lots of shares were being exchanged in todays trading positioning for a move.
Look for Brocade to possibly continue its upward momentum from 4.86 towards the near term/prior targets of 6.31. The larger trends targets wave 5 is 7.00. If traders like the news and market dynamics are supportive this could be a longer term target.
Another scenario would be near term bearish, showing an underperforming wave 3 being a top, with trading breaking to the downside towards a larger wave 4 triangle price projection of 5.36.
This price low was similar to the prior trends triangle break down scenario target shown in this trading chart. The underperformance of wave 5 of the prior analysis, in this regard, could have just been a head fake in momentum before the expected correction occurs.
