In this post, I want to share a chart setup. This one has a bearish outlook as Canada Goose Holdings Inc. (NYSE:GOOS) is showing signs of further weakness.
Chart Canada Goose Daily: Market Is Going To “Pluck” It Again
So many times, investors fail in an attempt to predict the top or the bottom of the market. The chart of the Canada Goose can be used to show a textbook illustration of this phenomena as from the end of 2017 the price of this stock was making new high one after another until it reached the $38 mark in February. I guess that investors started to short GOOS from $26 and above as the all-time high streak persisted.
The ultimate top appeared on the 7th of February when the price hit $38.25, and it wasn’t obvious. Blood confirmation followed the next session when the stock gapped down to the $34 mark or almost 12% for the day. The other day the slaughter of GOOS resumed as the price lost even more with an 18% drop to hit the low at the $28.41. The price lost almost $10 just in two sessions. It was a panic sale indeed when the AB segment had been shaped.
Technical analysis assumes that the market gaps should be filled and our chart above confirms it by providing another textbook sample. It took the price more than a month to climb back to the area where the gap started. The zigzag of that recovery charted the Rising Wedge continuation pattern (orange). The peak point was reached on the 21st of March at $36.66.
Then another drop has started, and GOOS broke below the wedge’s support to hit the $32 level at the beginning of this month. It was followed by a strong pullback to the broken pattern and when the price reached the $35 handle the day closed at the same level to shape the famous reversal Doji candlestick. Indeed, the price reversed down the next day confirming the candlestick’s warning sign.
What could be the next? We could see how the second leg of consolidation in the CD segment would emerge. At the start of GOOS’s review above I wrote that many try to guess the top or bottom and fail. Currently, we don’t have to guess anymore as the top was shaped and the first big drop is in place as well as the first minor collapse of the second fall in CD segment. So it is now safer to play short as we needn’t predict the top.
The target for D point has two options. The D1 highlights the area of double support where the earlier low and the medium term uptrend support intersect at the $28.4 level. The D2 point simply sits on the downside ($26) of the red channel contouring the whole consolidation. Limit your risk above the C point ($37).
INO.com Contributor, Metals
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.