Procter & Gamble Catches Its Breath Before Further Upside

 | Apr 06, 2017 | 1:51 PM EDT
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After finding resistance (selling) around $92, Procter & Gamble (PG) looks like it is taking a short-term rest within a longer-term uptrend. Let's dig into the technical levels and indicators to see what needs to happen to maintain that long-term advance of this consumer giant.

In this daily chart of PG, below, we can see a strong uptrend in the past year punctuated by one fourth-quarter correction. Prices turned upward again in January crossing back above the 50-day and 200-day moving averages. A bullish golden cross of these two averages can be seen in mid-February. In January and February there are two gaps to the upside, but volume does not rise significantly. The On-Balance-Volume (OBV) line shows some very bullish movement in late September and early October and then it moves slowly up and down with the price action. In the lower panel is the 12-day momentum study, which is not showing a bullish divergence as prices dipped recently.

In this weekly bar chart of PG, below, we miss all the price gaps but we can see the up and down trends of the past three years. PG is above the rising 40-week moving average line. The weekly OBV line gives a much more bullish representation of buying and its strength since June confirms the price gains. In the lower panel, the weekly Moving Average Convergence Divergence (MACD) oscillator is above the zero line, which is positive, but the two averages that make up the indicator have narrowed. We may or may not see these lines cross to a take profits sell signal. It all depends on the price action.

In this Point and Figure chart of PG, below, we can see an uptrend that goes back to 2011. Prices recently broke out at $89 for a double-top breakout and potential price target of around $114.

Bottom line: PG may trade sideways for a short period of time but I would anticipate that the longer-term bullish trend reasserts itself eventually. Aggressive traders should buy PG on strength above $92 and then risk below $89. $100 and then $114 would be our upside price targets.

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