Shares Set to Break Down From Rising Wedge Pattern
Nike shares dropped more than 12% in extended trading on Thursday after the athletic apparel and equipment maker reported weaker-than-expected quarterly revenue and cut its sales outlook. The stock sits poised to break down from a rising wedge pattern, indicating further potential downside. Technical analysis suggests a measured move projection of $75, while also highlighting a key support level at $82.
Breakdown from Rising Wedge Pattern
Nike shares experienced a significant downtrend between late February and early April following a bearish death cross signal when the 50-day moving average crossed below the 200-day moving average. Since then, the stock has been consolidating within a rising wedge pattern, which typically signifies a continuation of the existing downtrend. The recent disappointing earnings report has put the stock in a position to break down from this pattern, potentially leading to further declines.
Monitoring Key Levels Amid Weakness
Investors can utilize the measured move technique to estimate potential price targets if Nike shares continue to decline post-earnings. By calculating the distance of the previous downtrend before the rising wedge formation and subtracting that amount from the pattern’s lower trendline, a price target of $75 is projected. This level could attract bargain hunters looking for buying opportunities, especially if other technical indicators indicate oversold conditions.
Additionally, it is essential to keep an eye on a significant swing low that formed on the chart in October 2022, providing potential support around $82. If the stock approaches this level, it will be crucial to see if it holds as a support zone or if further downside momentum prevails.
Nike shares fell 12.4% to $82.54 in after-hours trading following the earnings release. The increased trading volume indicates institutional investors rebalancing their portfolios before the end of the quarter, adding to the downward pressure on the stock.
Conclusion
In conclusion, Nike shares are facing a breakdown from a rising wedge pattern after disappointing earnings results. Technical analysis suggests a potential price target of $75, with a key support level at $82 to watch for any signs of a reversal. Bargain hunters may look for buying opportunities near these levels if other indicators confirm oversold conditions. As always, investors should conduct thorough research and consider their risk tolerance before making any investment decisions based on technical analysis signals.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered as investment advice. The author does not own any of the securities mentioned as of the date of writing.
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Source: TradingView.com
As of the date this article was written, the author does not own any of the above securities.
