Cisco System (US: CSCO) recovery after a sharp drop in early March 2020 has set its course to further upside once prices break the resistance zone at US$48.29-US$49.27. Based on the technicals, the probability of Cisco forming a new high has increased.

1. The formation of a potential cup and handle pattern indicate that the stock is heading for a strong rally.
2. The handle which resemble a pennant/symmetrical triangle formation is a clear continuation of the motive trend. In this case, it is the uptrend from March 2020 to Mid-July 2020.
3. Bullish hammer was spotted above the 50-day moving average and the 3^rd touch of the symmetrical triangle on Thursday. Subsequent strong bullish candle on Friday confirmed the bullish hammer’s bias.
4. The 50-day moving average has successfully cross above the 200-day moving average, forming a Golden cross. Which is a strong confirmation of the bullish trend.

*The technical call is valid for 2 weeks only.

* Should the stock reverse and breaks below the pennant support at US$42.50, then the next price target will be at US$40.00.

CHART LEGENDS

Moving average

Red dotted line = 200-day moving average

Blue dotted line = 50-day moving average