Don't Ignore This Chart!

This Is How You Hammer Out A Bottom

Tom Bowley

Tom Bowley

Chief Market Strategist, EarningsBeats.com

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 of EarningsBeats.com, a company providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to EB.com members every day that the stock market is open. Tom has contributed technical expertise here at StockCharts.com since 2006 and has a fundamental background in public accounting as well, blending a unique skill set to approach the U.S. stock market. Learn More