ULTA Beauty Plays Desperately for a Longer Term Support Bounce

Aug 21, 2017: 2:52 PM CST

Can they do it?! Can they do it?

Buyers will be eager to step in to hold support at the current critical pivot for ULTA shares.

What’s the pivot and what’s the swing trading play from here?

ULTA Beauty Support Bounce Play

Before we get to the pivot play, let’s look at the beauty of the divergence and clear reversal pattern from the $300.00 per share level.

Shares advanced in a strong uptrend on higher momentum and volume, especially in 2016.

That situation deteriorated with a lengthy negative momentum AND volume divergence in place as we stepped into 2017.

Buyers gave it one more go, exhausting their campaign when shares peaked above $300 on a massive, year-long divergence with a V-Spike Reversal Top Pattern.

The end-result was the expected, logical sell-swing toward rising moving averages, and sellers broke price beneath the rising 20 and 50 week EMAs very easily.

Now we’re at the “final support” pivot of the prior lows from two big reversals in 2016.

Buyers can plan a bullish-style BOUNCE rally trade up away from the $230 per share level, placing stops just beneath the critical support zone.

Short-sellers must admit that it’s far too late to BEGIN a campaign of short-selling here, as the better play was on the initial reversal back beneath $300 or on any of the breaks beneath the 20 or 50 week EMAs.

However, short-sellers can remain patient/neutral here ahead of a possible breakdown beneath $230… meaning buyers won’t be able to stop the selling pressure with their reversal/support plays.

As a trader, your goal is to take advantage of the WINNING side and join with them as price “departs” up away from, or down beneath, the $230 key pivot.

Frame your trades in terms of the departure from this key pivot – and keep it simple.

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Corey Rosenbloom, CMT

Afraid to Trade.com

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