Nike Is Using Round Numbers As SupportFollowing the 2+ years of consolidation from December 2015 to May 2018,
it was likely that price was going to trend to the upside after breaking out.
Usually, when price consolidates for lengthy periods of time, it tends to form
a big trend in the direction of the breakout. As the breakout occurred above resistance,
we may see a trend continue for weeks if not months.
A consolidation lasting for a number of years normally develops into a strong linear trend
but in the case for Nike, we have seen more of a choppy trend with deep pullbacks.
What is apparent about these pullbacks is that they have been finding support at round numbers.
The first pullback after the consolidation period began when price started to decline in
September 2018 and price found support in December 2018 at the $70 round number.
Then price headed back up and soon pulled back to use the $80 round number as support in August 2019.
After price briefly held at $80, it found momentum and shot up through the $90 round number with ease,
only to pull back and use $90 as support where it currently lies.
If price follows the current pattern, it shouldn’t be too long before we see another move to the upside.
What we will have to wait and see is if price can break through the $100 major round number and
also pull back to use it as support.
One thing to note is that the behaviour of a stock or any instrument can change over time.
Price may decide to move away from the pullback pattern and form a strong linear trend when it
passes $100 in which case we will witness a fast-moving trend.
As for now, we will have to wait and see what price decides to do next.
See below for more information on our trading techniques.
As always, keep it simple, keep it Sublime.
