On April 20, the day before the company's Q1 earnings announcement, the stock jumped over 3% in anticipation of the report. But then weak results sent shares tumbling 4.8% on exceptionally heavy volume after the news was released.
UA already sported waning momentum in the daily time frame, but with the new high pre-earnings and ensuing sell-off, it also formed a weekly reversal bar.
Cumulative volume continues to fall, and the path of least resistance is now down. For trend followers, that means an opportunity to ride the stock lower, perhaps to the 200-day moving average and intermediate-term trendline near $71, roughly 9% below the current price. However, there is no solid support for several points below that, so UA could fall even further.
Recommended Trade Setup:
-- Sell UA short at the market price
-- Set stop-loss at $81
-- Set initial price target at $71 for a potential 9% gain in four weeks
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