One of the better rules of charting, largely because it is the basis of the “science” is that stocks and markets tend to have memories, and therefore one should assume that old support and resistance levels will always come into play. This is even if there is an extended delay in terms of a former key level being relevant again. We have a good example currently at FairFX Group PLC (LON:FFX)where it can be seen how the initial August 2014 floor at 43p has once again come in as new support. While it has to be admitted that last month saw a brief bear trap rebound from below this price, since then we have been treated to signs of stabilisation. This comes in the form of a sharp rise in buy side volume when 43p was briefly broken, and the positive divergence in the RSI window, after an extreme oversold reading below 10. The view now is that at least while there is no weekly close back below the former March floor at 40p we can assume a push towards the former January resistance zone in the upper 50p’s over the next 1-2 months. At this stage only cautious traders would wait on a clearance of the 50 day moving average at 46p before taking the plunge on the long side.
