Chembio Diagnostics Pops And Drops: A Technical Look

Chembio Diagnostics Inc. CEMI shares rallied higher Thursday after the company received a $4 million HIV test purchase order from the Partnership for Supply Chain Management, supported by the Global Fund for shipment in early 2022.

Chembio Diagnostics peaked at an intraday high of $6.93, but eventually cratered from that high to close down 19% at $4.31 per share.

Chembio Diagnostics Daily Chart Analysis

• Shares have been falling the past few months, but look to have broken out of what technical traders call a falling wedge pattern.
• The stock crossed above both the 50-day moving average (green), and the 200-day moving average, indicating sentiment in the stock turned bullish.
• These moving averages may both hold as an area of support in the future.

Key Chembio Diagnostics Levels To Watch

• The stock saw a large move Thursday, crossing above pattern resistance in the wedge pattern.
• To confirm the breakout, the stock needs to be able to stay above the pattern resistance and consolidate above the level. This could allow the stock to see a further push.
• The Relative Strength Index (RSI) shot higher Thursday, sitting around 81 on the indicator as of 2 p.m. ET. This is well into the overbought range.

What’s Next For Chembio Diagnostics?

Bullish traders would like to see the stock continue to break out of the wedge pattern and move higher. Bulls would like to see the stock consolidate for a time while being able to hold its gains. If the stock can hold its gains then it may be able to see another bullish push.

Bearish traders would like to see the stock fall back into the wedge pattern before falling further and breaking below pattern support. This could cause the stock to see a further downward push. Bears would also like to see the stock fall below the moving averages for a possible change of trend.