Stock Analysis:-Best stocks to swing trade for next month – Under Armour(UAA).
Under Armour (UAA) Stock Analysis and Swing Trade Idea – September 17, 2024
Under Armour (UAA) stock has been in focus recently as it closed at $7.92 on Monday, September 16, 2024. This analysis will break down the stock’s performance from both monthly and weekly time frames, highlighting key support levels, bullish indicators, and trade opportunities.
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1. Monthly Time Frame Analysis: Downtrend with Bullish Signals
On the monthly chart, Under Armour stock has been trading in a strong downtrend, consistently forming lower lows (LL) and lower highs (LH). However, despite this bearish structure, there are several technical signs indicating that a potential bullish reversal could be on the horizon.
1.1. Key Demand Zone at $6.70
The $6.70 price level has emerged as a significant demand zone, where buyers previously stepped in. The stock has already tested this level in recent months, and it’s now attempting to bounce back upward from this key support area. Demand zones often act as a floor where buyers regain control, potentially signaling the end of a downtrend.
1.2. Bullish RSI Divergence
Another important factor is the Relative Strength Index (RSI) on the monthly time frame. The RSI is showing a bullish divergence, which occurs when the stock price makes new lows, but the RSI forms higher lows. This divergence often indicates weakening bearish momentum and the possibility of a trend reversal to the upside.
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2. Weekly Time Frame Analysis: Bullish Momentum Ahead?
On the weekly chart, several bullish indicators are pointing towards potential upward momentum in the coming weeks. One of the most compelling signals is the formation of an incomplete bearish harmonic Bat pattern on the chart.
2.1. Harmonic Bat Pattern
Harmonic patterns are geometric price structures that provide insight into potential price movements. The incomplete Bearish Bat pattern forming on UAA’s weekly chart suggests a potential bullish trend in the near future. Harmonic patterns often lead to strong price reactions, particularly when they converge around key support levels.
2.2. High Volume at Support Levels
In addition, recent weekly candles have shown ultra-high trading volume near key support levels. Increased volume at support levels is a strong signal that large buyers are entering the market, adding to the bullish case for Under Armour stock. This suggests that buyers may be absorbing selling pressure, setting the stage for a potential move to the upside. It could be Best Stocks to Swing Trade for coming weeks ahead.
3. Key Levels to Watch: Support and Resistance
3.1. Support Levels
- $6.70: As mentioned, this is a critical demand zone that has been tested and may continue to act as strong support.
- $5.30: If the stock price breaks below this level and closes, it will invalidate the current bullish setup. This is a critical level for those watching for further downside risks.
3.2. Resistance Levels
- $11.70: This is the target level for the swing trade. Breaking above this level could open the door to further gains, but it remains a key resistance level in the short-to-medium term.
4. Bullish Trade Setup: Swing Trade Idea
Given the technical analysis, a bullish swing trade setup can be identified based on the current price action and key support levels. Here’s a potential trade plan:
4.1. Buy Entry Range
- Entry Range: Between $7.91 and $6.90
This range captures the potential buy zone, allowing for an entry near current price levels or slightly lower, closer to the strong demand zone at $6.70.
4.2. Stop Loss (SL)
- SL: Set the stop loss at $5.50.
This stop loss level is set below the demand zone and allows for potential price fluctuations while protecting against a deeper decline in case the bullish setup is invalidated.
4.3. Target
- Target: Set the target at $11.70.
This target is based on technical resistance levels and offers a significant upside potential for swing traders. Reaching this level would represent a strong bullish move, providing a good risk-to-reward ratio.
5. Risk Management: Important Considerations
While the analysis shows promising bullish signals, it’s essential to manage risk carefully. Keep in mind that stock markets are volatile, and no trade is guaranteed. If the stock price breaks and closes below $5.30, it would invalidate the current bullish setup, signaling potential further downside.
5.1. Position Sizing
Ensure that your position size is appropriate for your account. A common rule of thumb is to risk no more than 1-2% of your total capital on a single trade. This approach helps protect against significant losses in case the market moves against your position.
5.2. Monitoring Key Indicators
Keep a close eye on the RSI, volume trends, and price action near support and resistance levels. These indicators will help confirm whether the bullish setup remains valid or if adjustments need to be made.
6. Conclusion: Potential for Bullish Reversal
In summary, Under Armour (UAA) stock has been in a downtrend on the monthly chart, but there are signs of a potential bullish reversal.
Key demand zones, RSI divergence, and harmonic patterns all point towards the possibility of upward momentum in the near future. The weekly chart also supports this view, with high volume at support levels adding to the bullish case.
For traders looking to take advantage of this potential reversal, the outlined best Stocks to Swing Trade idea provides a structured approach with clear entry, stop loss, and target levels. As always, risk management is crucial, and traders should stay vigilant for any signs that the bullish setup might be invalidated.
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Note: Always remember: risk no more than 1% per trade.” Keep trailing your stop loss to secure bigger profits.
Please note this is only an opinion and not financial advice.
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