BBWI (DOUBLE TOP)Looking at BBWI’s daily chart, I’m observing what looks like a classic double-top pattern. Here’s a breakdown of the pattern and what it might suggest about the current market sentiment and potential price action:
Two Distinct Peaks:
BBWI has created two peaks near the $30 - $30.50 range, which has acted as a strong resistance zone. The price attempted to push through this level twice (mid-October and more recently) but failed both times, indicating significant selling pressure at that area.
The fact that price couldn’t break this level on two separate attempts suggests a weakening of bullish momentum.
Neckline at $28.77:
Between these two peaks, the price pulled back to form a low at approximately $28.77. This level now acts as a neckline, representing a key support area.
This neckline level is significant because, in a double top formation, a break below this support is what confirms the pattern. If BBWI moves below $28.77, it would indicate a shift from buyers to sellers, suggesting that the trend might reverse to the downside.
Potential Implications if the Neckline Breaks:
Bearish Signal: If the price breaks and holds below $28.77, it would confirm the double top and signal a bearish reversal. The breakdown would suggest that buyers are losing control and that sellers are likely to drive the price lower.
Measured Move Target: In technical analysis, a common approach is to measure the height of the double top pattern (from the peaks at $30.50 to the neckline at $28.77) and project it downward from the neckline to estimate a potential target. This distance is approximately $1.73, which would suggest a target around $27.00 if the neckline breaks.
Support Zones Below:
If the breakdown occurs, the next significant support level appears around $26.13, the old low. This level has acted as a strong support in the past so it could be a potential stopping point for a bearish move.
Additional support may also be found at around $27.50, a psychologically significant level at which buyers might step in.
Technical Indicators:
MACD: Currently, the MACD is in a downward trend, reinforcing a bearish bias. This indicates that bearish momentum may be building, adding weight to the idea that a neckline breakdown could lead to further downside.
Volume: Volume has been relatively light on recent upward moves and stronger on declines, which suggests a lack of conviction on the bullish side. Increasing volume on a move below the neckline would strengthen the bearish outlook.
