In classical Greek mythology, Pandora was the first woman on Earth. The gods endowed her with many gifts: Athena clothed her, Aphrodite gave her beauty, Apollo gave her musical ability, and Hermes gave her speech, and of course, a box, which contained all the evils of the world.
Pandora opened the box and all the evils flew out, leaving only “Hope” inside once she had closed it again. Hope. That is a word that has little use in trading. You often hear that “Hope” is not a strategy. Yet many are hoping that Pandora’s Box will open again.
The chart of the price of Pandora Media Inc (NYSE:P) stock below explains why. Pandora gapped lower in October, losing over 35% following a bad earnings report and talk of legal complications. It staged a small comeback into mid December before falling again, to new lows.
It found a bottom in February, and began a consolidation in a symmetrical triangle. It broke that triangle to the upside in May, giving a target on the move to 14.20.
But since then it met resistance at the first touch of the 200 day SMA in June and pulled back. This added a possible Cup and Handle pattern to the mix, with a target to 18.20. This will trigger on a move over the June 3rd high. There is also a Measured Move higher from the May 3rd low to 15.10.
Which brings us to Pandora’s Box. The stock has moved in a consolidation zone, a box if you will, for over a month. A break of that box to the upside releases the stock to the 3 targets above. So this time, releasing “Hope” is a strategy.
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