CDL HTrust - Stalling of rally at key resistance heralds possible near-term downside

CDL Hospitality Trust could be facing more near term downside as the price seems to have stalled at its key $0.845 resistance (also hit the upper Bollinger band) on relatively high volume. A lower close today would confirm the bearish price reversal.

And downside momentum looks set to accelerate in the near term. The RSI has already turned down just shy of the overbought region while the stochastic indicator is about to make a negative crossover inside the overbought region. The Accumulation/Distribution indicator also made a sharp bearish reversal yesterday.

We expect the stock to find initial support at $0.79 (2-month uptrend line and centre Bollinger band), breaking which, the next key support is likely at $0.72 (minor troughs in May ’09 and Jun ’09 and lower Bollinger band).

Above the $0.845 key resistance, we see $0.92 (minor peak in Oct ’08) as the next resistance.

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