High-tech injection plastic moulder Carclo’s (CAR) torrid 18 months could soon come to a close as the counter approaches the highly significant level of 100p, source of both support and resistance over the past 15 years. A trend line connecting the lows of 2003 and 2008 is also currently passing through 100p.

I flagged the £74 million cap’s downside potential in spring 2013 (see Chartist, Shares 28 Mar ’13), when it was trading at 428p. Two gaps latter, the first one in January and the second in April, and the counter is well and truly beaten up.

Since May, the shares seem to have stabilised and have not posted further new lows. The market hates gaps persisting on a chart as they represent pockets of missing price action and potentially sidelined traders. I would anticipate a rally to close the April gap between 152p and 179p.

Closing this gap would initially require a successful assault of the bear trend line just below 150p, and if a breach here is achieved it could point to further gains. A retest of February’s 221p high might be the next objective, after which the market could focus on closing January’s gap to 260p, a significant level in many ways as it is around here the counter would likely regain its 200-day average and test the 38.2% retracement of the fall from 510p.

Buy 112.0p Target 180.0p Stop Loss 100.0p

1. Key support gives way at 350p in November

2. Further historic support is broken in January and the shares bearishly gap lower

3. Another bout of selling produces a second gap in April

4. Counter stabilising close to 100p and off support from the long-term bull trend line

Market value: £74.0 million