The Venaxis Spring is Coiled (APPY)

I know on the surface that Venaxis Inc. (NASDAQ:APPY) hasn’t exactly been the most riveting of stocks lately. Heck, APPY shares are exactly where they were at the end of July, and volume has been even less than minimal. I’m telling you though, there’s just something about this stock – and its chart – that tells me an explosive bullish move is brewing.

Just as a preface to a chat about APPY, think about a spring that’s coiled. There’s potential for a violent “boing”, but as long as whatever’s keeping the spring is coiled, then that potential de-coiling is irrelevant. If for some reason the spring’s shackles are undone, the look out – BOING! Yeah, well, just think of Venaxis Inc. as a coiled spring. It’s not doing anything right now, but it could very easily make an explosive bullish move with just one small (and easy to achieve) catalyst.

The Venaxis spring has been coiled by a rising support line and a falling support line. The rising support line is the 50-day moving average line (purple), while the falling support line is the 100-day moving average line (gray). Those two moving averages are on a collision course though, and clearly APPY can’t drift sideways between the two when there’s no space to waffle in between then.

But how do we know APPY is apt to make a bullish break rather than a bearish one? Truth be told, we don’t; there are never any guarantees in trading. But, there are some clues in place that suggest the undertow is bullish.The biggest clue in favor of bullishness from Venaxis Inc. is the fact that the stock’s actual still in a broad (even of wobbly) uptrend since June’s lows. The way shares have been gyrating around the $1.46 mark is also a biggie. That line was resistance in June and July, and though it’s not exactly become a support line yet, clearly the buyers are having no problem holding the stock above that former technical ceiling.

As for the timing, we’re apt to see the spring uncoil sooner than later. Though just gyrating around the $1.46 mark, we can also see the string of higher lows and lower highs has pretty much taken APPY to the pointy tip of a wedge shape [aided by the two key moving average lines]. The contraction is squeezing the chart tighter and tighter, but there’s no room left… the pressure building.

The proverbial green light is a close above the 100-day moving average line, currently at $1.48. Not only will a move above the 100-day line crack what’s been a tough ceiling, it will also rock Venaxis Inc. shares out of the converging wedge pattern.

The trick is exercising patience until that one last step is taken.

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