NKE in an Uptrend, but OBV Shows Negative Divergence
Disclaimer: This analysis is for educational purposes and does not constitute a buy or sell recommendation. The goal is to share a technical perspective based on classic technical analysis concepts for traders and investors. Always make investment decisions with caution, taking into account your own analysis and risk tolerance.
I’ve noticed that
NKE is in an early-stage uptrend, and according to John Murphy in the first chapter of his book Technical Analysis of the Financial Markets (page 4):
"It is assumed that a trend in motion is more likely to continue than to reverse."
However, I’ve also observed a negative divergence between the price action and the OBV (On-Balance Volume).
As Martin Pring describes in his classic Technical Analysis Explained, Volume II: Volume Indicators (page 555):
"OBV, therefore, offers a rough approximation for buying and selling pressure and has become a very popular indicator."
In NKE’s weekly price chart, we’ve seen a higher high compared to the previous top, but the OBV has not confirmed this movement, which could be a warning sign.
Given this divergence, the strength and continuation of this uptrend come into question. If buying pressure is not sustaining the current price movement, it could signal trend fatigue or a possible short-term correction. Will the uptrend continue, or does this OBV divergence suggest a potential reversal or weakening of the trend? The question remains whether buying strength will be enough to sustain this rally in the coming weeks.
What do you think? Does the OBV divergence make you concerned about NKE’s uptrend? Share your thoughts in the comments, and let’s discuss the possible scenarios!
I’ve noticed that
NKE is in an early-stage uptrend, and according to John Murphy in the first chapter of his book Technical Analysis of the Financial Markets (page 4):"It is assumed that a trend in motion is more likely to continue than to reverse."
However, I’ve also observed a negative divergence between the price action and the OBV (On-Balance Volume).
As Martin Pring describes in his classic Technical Analysis Explained, Volume II: Volume Indicators (page 555):
"OBV, therefore, offers a rough approximation for buying and selling pressure and has become a very popular indicator."
In NKE’s weekly price chart, we’ve seen a higher high compared to the previous top, but the OBV has not confirmed this movement, which could be a warning sign.
Given this divergence, the strength and continuation of this uptrend come into question. If buying pressure is not sustaining the current price movement, it could signal trend fatigue or a possible short-term correction. Will the uptrend continue, or does this OBV divergence suggest a potential reversal or weakening of the trend? The question remains whether buying strength will be enough to sustain this rally in the coming weeks.
What do you think? Does the OBV divergence make you concerned about NKE’s uptrend? Share your thoughts in the comments, and let’s discuss the possible scenarios!
Disclaimer
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