American Eagle Outfitters (AEO-N, Wednesday’s close US$20.60) declined from US$38.99 in June 2021 to US$9.46 in October 2022 (A-B) while trading below the falling 40-week Moving Average (40wMA). The average flattened in late-2022 and the price meandered above and below it to indicate a period of base-building.
A bullish technical pattern known as a “W” formation developed over the past two years (dashed lines). The recent rise above the neckline of this formation (C – shaded area) signaled a breakout and the start of an uptrend toward higher targets.
Behaviour indicators including the rising 40wMA confirm the bullish status. There is good support near US$16-17; only a sustained decline below this level would be negative.
Point & Figure measurements provide an initial target of US$24. Higher targets are visible.
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Monica Rizk is the Senior Technical Analyst of the Phases & Cycles publication (www.capitalightresearch.com). Chart source: www.decisionplus.com