Nokia Blasts Through Resistance: Can The Stock Power Higher?

Nokia Oyj NOK was trading over 2% higher on Thursday afternoon after gapping up about 1.5% to start the trading day.

The Finland-based multinational telecommunications company was the target of a short squeeze on Jan. 27, the same day AMC Entertainment Holdings Inc AMC squeezed to its highest price since October 2018.

The amount of short interest has continued to decrease and is now insignificant. Of Nokia’s massive 4.64 billion share float just 34.2 million shares are held short. The number has decreased from 37.78 million in August.

See Also: Nokia To Pitch Other Connected Device Makers For Licensing Fee: Bloomberg

The Nokia Chart: On Thursday, Nokia’s big bullish move north slammed the stock into a resistance level at the $5.80 mark. When Nokia was unable to regain the level as support, profit takers came in and dropped the stock down, which caused Nokia to wick from the level.

The upper wick paired with the lower body of the candlestick creates a potential shooting star candlestick pattern. The pattern comes at the top of an uptrend and indicates the stock may trade lower in the future. However, Friday’s candlestick will be needed for confirmation the pattern was recognized.

If Nokia’s stock drops lower over the few trading days it may just put in another higher low on the daily chart. As long as the stock doesn’t fall below Wednesday’s low of $5.54 the uptrend will remain intact.

The gap up left below from Thursday’s candle is likely of little importance because the range is only a few cents, but Nokia has two larger gaps below: On Apr. 29 Nokia left a gap with a range between $4.30 and $4.55 and on June 25 the stock left a trading range between $5.18 and $5.29 open. Gaps fill 90% of the time so it is likely Nokia will trade down into the ranges in the future.

Nokia is trading above the eight-day and 21-day exponential moving averages (EMAs) but with the eight-day EMA trending below the 21-day. If Nokia can continue trading up above the $5.69 level the eight-day EMA will cross above the 21-day, which would be bullish. The stock is trading well above the 200-day simple moving average which indicates overall sentiment is bullish.

• Bulls want to see either consolidation with a higher low or for big bullish volume to come in on Friday and push the stock up over the higher resistance level. If Nokia can regain the level as support, it has room to trade up toward $5.80.
• Bears want to see big bearish volume come in and drop Nokia back down below the $5.69 level. If the stock loses the area as support it could fall back toward $5.43.