An ascending triangle is forming as ASNA rallies out of being oversold. ASNA was recently dump sold a whopping 32%. This change in sentiment can be explained through the company’s lackluster fundamentals: "A Q3 adjusted EPS of $0.04-$0.06 vs $0.07-$0.12 previously…Full-year adjusted Earnings/Share is now guided to $0.10-$0.15 from $0.37-$0.42 previously…Comparable sales are seen down 6%-7%" (Seeking Alpha).
Given that this bullish continuation pattern established itself AFTER the negative catalyst, I am lead to believe that ASNA is unlikely to break down further. My Swing Cycle Indicator’s (modified stochastic) "overbought" signals validate the resistance @ $2.20. In addition, ascending triangles also form in the RSI and MACD with the resistance at their respective midlines. Together, these suggest that an overall change in momentum may occur, perhaps forecasting a new uptrend in the intermediate term. Looking for confirmation in price, RSI, and MACD all breaking out above their respective resistance levels.
I plan on buying the support @ roughly $1.95 and selling half of my position @ $2.20, allowing me flexibility should ASNA be unable to breakout through the resistance there. If we bounce off of resistance, I’ll likely take the rest of my profits based upon candlestick patterns. If I’m completely wrong, I’ll stop out @ $1.85 support level.
References:
https://seekingalpha.com/news/3268272-ascena-plunges-32-percent-slashing-outlook
Given that this bullish continuation pattern established itself AFTER the negative catalyst, I am lead to believe that ASNA is unlikely to break down further. My Swing Cycle Indicator’s (modified stochastic) "overbought" signals validate the resistance @ $2.20. In addition, ascending triangles also form in the RSI and MACD with the resistance at their respective midlines. Together, these suggest that an overall change in momentum may occur, perhaps forecasting a new uptrend in the intermediate term. Looking for confirmation in price, RSI, and MACD all breaking out above their respective resistance levels.
I plan on buying the support @ roughly $1.95 and selling half of my position @ $2.20, allowing me flexibility should ASNA be unable to breakout through the resistance there. If we bounce off of resistance, I’ll likely take the rest of my profits based upon candlestick patterns. If I’m completely wrong, I’ll stop out @ $1.85 support level.
References:
https://seekingalpha.com/news/3268272-ascena-plunges-32-percent-slashing-outlook
Trade active:
Today's Hammer grazed my buy zone, and since I made a limit order I snagged my shares for $1.94! Preparing for a retest of my profit target. Depending on how the candles look up there, I'll decide whether I want to sell half of my position and pray for a breakout, or completely cash out.
Trade closed: target reached:
Selling Half of my Position, as we've broken through my Profit Target