In a sign of difficult times, discount retailer Dollarama (DOL.TO) continues its steady march toward the top of the Green Favored Zone of the SIA S&P/TSX 60 Index Report, moving up another 2 positions yesterday to 4th place. Since we last mentioned DOL.TO in the March 10, 2022 edition of the Daily Stock Report, the shares are up 6.1% while the S&P/TSX Composite Index is down 11.1% over the same time frame.
From July of 2020 through April of 2022, Dollarama (DOL.TO) shares steadily advanced in a Rising Channel of higher highs and higher lows. Two months ago, the shares broke through the top of that channel and rallied toward $75.00. An ensuing correction was contained above $65.00, setting a higher low and keeping its long-term uptrend intact. Dollarama has moved into a sideways consolidation range lately but in the last couple of weeks they have started to climb on rising volumes suggesting that accumulation may be resuming.
A close above $75.00 would signal the start of a new rally phase with next potential resistance on trend near $85.00 based on a measured move from the current range. Initial support appears between $65.00 and $70.00.
Earlier this year, Dollarama (DOL.TO) shares staged a big High Pole Rally that ran out of gas near the $75.00 level. In May, the shares staged a correction but have bottomed out at a higher low near $65.00. This month, the shares have reversed into an X column and an upswing within this higher consolidation range appears to be underway.
A breakout above $76.00 would signal the start of a new upleg and complete a pending double top pattern. Should that occur, vertical and horizontal counts suggest potential upside resistance on trend near $79.05, $87.25 and $92.60. Initial downside support appears near $67.45 based on a 3-box reversal.
With a bullish SMAX score of 9, DOL.TO is exhibiting strength against the asset classes.
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