DAVE (Famous Dave’s of America) looks to offer an objective long entry on any break above 12.75, which will have taken the stock over that purple minor downtrend line on this 120-minute period chart. R1 & R2 are the first key resistance levels where active traders might opt to book quick profits while the official (swing trade) targets for this trade are T1 at 15.35 & T2 at 16.95. Suggested stop on a daily close below 11.70.
This 2-year daily chart below helps to support the case for a likely trend reversal in DAVE from at or near current levels. The daily chart shows the same bullish falling wedge pattern as the 2-hour chart above although it provides a much better visual of just how steep & deep the decline in DAVE has been, with the stock plunging over 66% since the double-top peak high back in mid-February of this year. That double-top high (potential bearish development #1) was followed by a breakdown below the 2 ½ year primary bull market uptrend line in early May (bearish development #2) with the stock continuing lower to break below the base of the double-top pattern (bearish technical event #3) a few weeks later. Typically, the steeper the wedge, the more explosive the reversal once the stock finally breaks out above the wedge pattern.
Fast-forward to today and we now have a stock that has given up 2/3rds of its value while trading at long-term support (highlighted on the 10-year weekly chart below) in what appears to be a fully developed bullish falling wedge pattern. All we need now is a match to light this fire and although the “safe” or conventional entry will come on a break above the top of the wedge pattern (i.e.- the primary downtrend line), the fact that DAVE is current trading at long-term support make an entry at current levels and/or above the minor downtrend line on that 120-minute chart.