Why Vodafone plunge may not be over

Vodafone (LSE:VOD) has been getting a bit of a hammering recently and we're loath to call it "cheap", despite the share closing the session at 200.875p mid-price. The share suffers from a 'red' line (see chart below) and currently it's at 202.504p, with the price now closing a session below this uptrend since 2009.

The scenario now exists of weakness below 199p triggering further painful reversals, as 194p looks probable, but, realistically we're looking hard at 180p as a potential bounce point.

The problem with this tableau of misery is it takes the price into a region where negative news could easily drop the price to 142p which challenges an uptrend since 1996!

Or in plain English, it doesn't look impossible but if VOD were to visit 142p, we'd be looking very hard at its bounce potentials.

If the current drop against VOD is to enact a panic recovery, trades above 208p should prove capable of 212p which, if bettered, will provide the first hint the price has already bottomed.

In such an instance, secondary is at 217p and hopefully capable of bettering the immediate downtrend. This would at least allow us to tentatively speculate of 233p and beyond though, in fairness, we'd need to rerun the numbers.

For now, we rather suspect Vodafone wants to connect with 180p or so.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.