In a departure from my usual Updata charts, here's the updated (no pun intended) daily chart for Xcite Energy.

As I previously mentioned, the key to this was not the price trendline but the RSI trendline formed from the bullish divergence. We got the bounce yesterday with a doji candle in the price chart and these have both followed though nicely today to the extent that it managed to close back above the short term price uptrend.

This is a classic false breakout and shows how important it is to use RSI in conjunction with price to help avoid getting caught out. I'm now long on this with a tight stop below 101p. My initial target will be the 112/3p resistance but if it does get back there then there will be a nice cup and handle pattern which should target 130p and then beyond when we consider the ascending triangle from the low.

Not shown is the price downtrend resistance from the Feb 2012 high which lies around the 110p mark on Monday so if the price does get back to 112/3p then it'l have broken the downtrend supporting the notion of a completed cup and handle/ascending triangle pattern and an upside breakout may well follow. I'll look for an early clue in the RSI downtrend and give a heads up on here accordingly.