SNOWFLAKE $SNOW | Potential Scenarios and Key Observations
Updated
SNOW Currently, SNOW is in an upward channel but has experienced strong movement to the downside. It is now trading below the 200 SMA trendline.
It's important to note that SNOW is currently oversold, and an RSI divergence has occurred within this oversold area.
My indicator also reveals that shortly after an oversold RSI divergence occurred, the price reacted strongly to it.
Nevertheless, I would like to see one of two possible next moves before considering a long position.
Scenario 1:
SNOW rebounds, tests the 200 SMA, gets rejected, and heads towards the bullish gap below the current price. In this area, I would like to see a strong reaction, possibly indicated by a significant spike in volume accompanied by a rejection candle.
Scenario 2:
SNOW falls directly into the bullish gap below and strongly rejects this area. In this scenario, I would like to see the gap closed by a candle with an above-average wick rejection and a spike in volume to confirm buyer commitment.
In terms of the bigger picture, although the stock price is in a small upward trend, movements in both directions have similar strength. Volume spikes occur when the price reaches either the upper or lower level of the channel.
Note
I was hoping to see a significant spike to the upside after filling the gap to observe more commitment. Nevertheless, I still believe there is potential for further upside.Note
On the daily chart, SNOW has formed a miniature Head & Shoulders pattern within the lower bullish gap. The RSI Divergence remains intact. Presently, trading volume is moderate to low.Should the chart breach the upper boundary of the H&S pattern, a retest of the upper gap seems likely. Targeting the gap retest would be my initial profit objective.
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