Brown-Forman class B shares (BF.B) pushed above resistance in May but have pulled back to that area again. Will the resistance area reverse roles and act as support? Let's check the charts and indicators for clues.
In this daily bar chart of BF.B, below, I can see some technical problems. First, when BF broke out above its March and April highs in May volume did not expand. When prices break out to new highs you want to see volume increase. Here it hasn't. As prices declined the past two weeks we can see that volume increased and the On-Balance-Volume (OBV) line turned lower. The OBV line tells me that sellers became more aggressive. In the lower panel is the Moving Average Convergence Divergence (MACD) oscillator which is close to a test of the zero line and a sell signal.
In this weekly bar chart of BF.B, below, we can see that prices are above the rising 40-week moving average line. Like the daily volume pattern, the weekly chart does not show an increase in activity. The weekly OBV line has been neutral for months while the MACD oscillator on this time frame suggests weakness ahead.
In this Point and Figure chart of BF.B, below, we can see an upside price target just short of $70 but prices are currently in a down column of "O's".
Bottom line: There is an old Wall Street saying that volume is the weapon of the bull. The bull is not showing me the right kind of volume action on BF.B lately and that makes me cautious. The risk for longs is if BF.B closes below $53.