The most salient feature of the enclosed 4-hour chart of Cisco (CSCO) is the series of lower-lows from mid-November at 19.34 into last Friday at 19.00, which were not confirmed by my 4-hour RSI (momentum) gauge.

From a momentum perspective, the hourly chart work produced an RSI "sling-shot" that only needed a catalyst to trigger -- and the catalyst came in the form of a brokerage firm upgrade. With that in mind, let's also realize that a similar momentum sling-shot also had developed in the daily chart. The chart pattern indicates that CSCO ended its downleg from 24.62 (Nov 10) at 19.00 on Friday afternoon, and has just started a recovery upleg.

Initial target is a test of the prior rally peak at 19.72, which should be hurdled on the way towards 20.40/80 thereafter.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.