View on Cisco - Long Term & Short Term

 

My take on Cisco.

 

Here is a Long Term Log chart,

 

 

The Chart is a Long Term Log Chart. As you can see after the rise after a stupendous rise from 1994 - 2000, it retraced nearly 40% and is in what is called as a Widening Wedge from 2002 onwards.With Volatility having come down drastically we can remain in that channel for a long period of time.

 

 

The above weekly chart shows the formation of a Inverse Head & Shoulders. Technically what this says is that once price breaks the neckline of 28, it should over a period of time achieve a price target of 41. Ofcourse there is no guarantee that such a target will be achieved since other factors may come to influence, but on a long term scale, chances of it achieving are higher.

 

A complex Inverse H&S as the above seems to be has a low chance of failure though failure of the pattern can happen and is visible if after breaking the neckline, stock reacts and starts to go down. Breakout volume can be crucial. If stock breaks the neckline with strong volume, chances of it being successful are tremendously higher.

 

 

Now the Daily Chart. On the daily chart too we seem to be seeing a Inverse H&S formation with a target price of 27 which is also a strong resistance point.

 

On a short term basis, the stock is weak and unless it crosses 25 decisively, its difficult to project any strong bullish move in near term. The stock has been consolidating for more than 8 years now and the longer it remains in that channel, stronger will be a move in either direction.

 

As on date, long term appears more strong as compared to short term where weakness may persist.

 

Regards

 

Prashanth