Major US retailers, including Target Corp. (TGT) are scheduled to report earnings next week, which may put the group in the spotlight in the coming days. Target crashed out of the green zone of the SIA S&P 100 Index Report back in May but since July it had been working its way back upward within the Red Unfavored Zone. Since the start of this month, however, Target’s relative strength ranking has started to weaken once again. Yesterday it fell 5 positions to 79th place.
Since Target Corp (TGT) staged a big gap down in May, its shares have been trading back and forth in a range between $136 and $182. The end of a summer bounce back in August established the high end of this range, and since then, the shares have been under distribution.
Last month, TGT peaked at another lower high and yesterday, declines accelerated once again with the shares taking out their 50-day moving average and closing back under $160 to confirm the start of a new downswing.
Initial downside support tests appear near the $150 round number, then previous lows near $145 and then the $136-$140 area. Initial resistance drops toward the $160 breakdown point.
Back in May, Target Corp (TGT) staged a major selloff that signaled the start of a new downtrend. In July and August, the shares staged an initial trading bounce that topped out at a lower high. Since then, a symmetrical triangle of lower highs and higher lows has been forming which has historically identified a period of consolidation within a larger trend.
Target is approaching the apex of the triangle, increasing the probability of a breakout in either direction. A close below $146.25 would snap the support line and a close below $143.40 would complete a double bottom which would signal the start of a new downleg with next potential support at prior lows near the $140.00 round number, then an uptrend line near $130.00.
On the other hand, a close above $168.00 would snap a downtrend line and complete a bullish double top pattern which would signal the start of a new uptrend with next potential resistance at the August peak near $181.85.
With a bullish SMAX score of 6, TGT exhibiting strength against the asset classes for the moment.
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