By: Zev Spiro
America Movil, S.A.B. de C.V (AMX) has been trading sideways in a rectangle (basing) pattern since November. A trigger could occur in either direction via a daily close, either above resistance or below support. The minimum expected price objective is generated by measuring the height of the pattern and expanding by that same distance from the trigger point. There are potential early warning signals of a downside trigger from the On-Balance Volume (OBV) indicator and comparative relative strength of AMX versus SPY.
Chart 1: Highlights the rectangle pattern and displays the recent down move in the OBV. Trigger: Long: daily close above resistance at $59.65, Short: daily close below support at $55.65. Target: Long: $63.65, Short: $51.65. Protective Stops: Confirmed move back through the trigger point.
Chart 2: Displays the recent down move of the comparative relative strength of AMX versus SPY. This break down displays the underlying weakness of AMX and could be an early warning to a downside trigger of the rectangle pattern.
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*DISCLOSURE: Long SPY
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