The USD 10.26 support, currently tested, should allow Brocade Communications Systems, to rally again.

The company, which engages in the provision of innovative network solutions, enjoys a good Surperformance rating, which underlines its strong fundamentals. The Reuters Consensus is optimistic about the stock and displays an average target price of $11.9, ie a 14% increase. Moreover, the firm’s finances are excellent and investors can appreciate its very nice profitability (operating profit amounts to 25%)

Technically, the stock has followed a bearish trend. Even if all the moving averages are still in a downtrend, a positive reaction in the USD 10.26 area should stop this trend and allow a technical rebound. Indeed, the security has been recently oversold.

Active investors can now take long positions at current prices and aim firstly the $11.08 bull target. In case of a breakout of it, our second target price will be the USD 11.71 mid-term resistance.
However, a stop loss order will be set below the short term support to avoid important losses.