A Play for Whole Foods WFM Off Critical Support
Is it time to buy Whole Foods stock (WFM) for a rapid bounce swing trade?
Let’s see if that might indeed be the case:
Just based on a quick glance at the Daily Chart, we’re seeing a potential repeat-bounce higher.
The $30.00 per share level is an Aust support point and a June reversal point for price.
Thursday and Friday gave us bullish reversal candles off this level and Monday’s action gave us a strong bullish candle.
Just looking at $30.00 your first short-term bounce target is the Midpoint Magnet (yellow) at $32.50.
Should price repeat the bounce pattern for a third time (note May), then the final target would be $34.50.
This logic is based on nothing more than a support-bounce play.
Either way, $30.00 will be your critical “bullish above; bearish beneath” pivot.
The Weekly Chart gives us cause for more bullishness. Here’s why:
Through 2014, WFM shares formed a Rounded Reversal on Positive Divergences ahead of a breakout above $40.00 – an aggressive yet very successful buy signal – in December.
Shares collapsed from $56.00 to $28.00 after that but we’re now seeing a longer/larger similar Reversal Pattern on Positive Divergences.
At the moment, the $30.00 per share level is the last line of defense for the bears – if they can’t push price under $30.00 then buyers/bulls are likely setting the stage for another big upswing higher.
Whether you’re a short-term trader or a longer term investor, watch the departure up away from (or down away from) $30.00 and the growing bullish evidence for a possible rally and bullish phase into 2017.
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Corey Rosenbloom, CMT
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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).
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