Don't Ignore This Chart!

This Is How You Hammer Out A Bottom

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Children's Place (PLCE) printed a reversing hammer on Friday just after touching gap support at 70.51.  This comes off a lengthy downtrend that began in mid-April after a negative divergence had developed.  Take a look at the technical picture on a daily chart first:


Adding further bullishness is the set up on the weekly chart where PLCE shows very strong momentum and just tested its rising 20 week EMA.  Take a look:

Normally a 20 period EMA test with a strong MACD represents solid reward to risk entry.  The 20 week test, together with a test of both price and gap support, provides a nice argument for owning PLCE in the near-term.

(DISCLOSURE:  I currently own shares of PLCE)

Happy trading!

Tom

 

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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