FedEx Shares Ready to Deliver

 | Apr 08, 2013 | 9:05 AM EDT
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Looking at both Fibonacci time and price parameters, I am building a case for looking at FedEx (FDX) on the buy side after a recent healthy decline.

First, let's talk about Fibonacci timing. When I see a cluster of these time cycles come together within a relatively tight time range, it tells me to watch for a possible reversal of whatever the trend is into those cycles, give or take a day. (A cluster is the coincidence of three or more time relationships that come together within a relatively tight time range.)

FedEx (FDX)
Source: Dynamic Trader

The cycles that I'm seeing now in FDX come in between April 5 and April 9. The cycles are illustrated on the daily chart above. Since FDX has been trading lower into this time window, it suggests that the odds are higher for a reversal back up. One of the main cycles I like in this analysis is the 100% projection of the prior decline into the Nov. 16 low, which lasted 19 trading days. I projected this 19-day cycle from the recent high made on March 11, which gave us a time projection of April 8. So far, the recent low was made on April 5, 18 trading days down from the recent high. I often see corrective moves that are similar in time, so this time window is worth watching.

Now let's look at price. I have identified a Fibonacci price cluster of support at the $92.69 to $94.15 area. This zone includes a 0.618 retracement of a major price swing, a 100% projection of a prior larger decline, along with one other confirming retracement and a couple of price extension of prior swings. The recent low has been made at $94.20, which is just a nickel above this cluster zone. This is close enough to start watching for buy triggers.

The maximum risk is defined below the $92.69 area. The upside potential off this area is to a healthy target of $113.87. Even if we only see a corrective rally instead of the full resumption of the rally, this should be tradable. My thought is that a corrective move would take the stock at least towards the $101 to $103 area.

For more information on trades and triggers, please click here.

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