Don't Ignore This Chart!

MACD Histogram Teeters as AT&T Breaks Wedge Line

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Despite a strong stock market in 2017, AT&T ($T) is having a tough time with a breakdown in early May and a sharp decline below the 200-day SMA. The stock rebounded after a double-digit decline with a bounce back to the 200-day SMA, which is now falling. Thus, we can clearly say the long-term trend is down for this stock. Short-term, the rebound ended as the stock broke the wedge line and moved below support at 38.50. This signals a continuation of the prior decline and argues for further weakness, perhaps back to the November lows. 


The indicator window shows the MACD Histogram on the verge of turning negative. This means that MACD is about to move below its signal line, which is the 9-day EMA of MACD. Keep in mind that MACD is based on exponential moving averages and moving averages lag. This is why we are seeing a breakdown on the price chart, but have yet to see the MACD Histogram turn negative.  

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--Arthur Hill CMT

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Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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