The VHI (Valhi Inc) Active Long Trade appears to be breaking out of a bull flag continuation pattern today. VHI triggered a long entry on a break above the 5.50 resistance level on June 25th & is currently trading about 28% above that level after gaining about 40% before pulling back. That pullback, which was greatly needed in order to work off the extreme near-term overbought conditions, resulted in prices moving gradually lower on diminishing volume, which is what you want to see during a pullback or consolidation within a bullish trend. That pullback formed what appears to be a bull flag continuation pattern and today prices have broken above the pattern and have been building on those gains so far. The previous & updated 60 minute charts are posted below but the official profit targets remain as previous posted on the daily chart (click the VHI symbol tag at the bottom of this post to view all prior notes & charts on this trade).
I will say that I would prefer to see a considerable expansion of volume on the breakout of this pattern which so far, is not the case. However, price action comes first in my book, volume second, so for now I’m watching to see if VHI can take out the recent highs of 7.63 put in a place about two weeks ago. Such a move, especially if we start to see an increase in volume as the stock rises, would increase the odds of VHI moving up to at least the 8.10 resistance area, if not all the way to the 10.20ish area, which is about where the bull flag pattern projects to. As stated earlier, this is an very aggressive trade so as always, DYODD and consider adjusting position sizing to account for the above average risk & return potential.