Walgreens Boots Alliance Inc. (WBA) has been in a trading range for about a year and a half, frustrating longs and shorts equally, with relatively short moves up and down. Recently, prices broke down below the lows of January, February, April and May around $80.
The key question from here is whether WBA will hold or break the next chart support around $76. Let's check out the latest charts and indicators to see what strategy might be the best course.
In this updated daily bar chart of WBA, above, we can see how for months WBA crossed above and below the 50-day moving average line and the 200-day moving average line. Lots of trading signals, but probably little in the way of profits. Trend-following indicators like moving averages work well in trending markets.
In the past six weeks, prices have stayed below the flat 200-day average line and the declining 50-day line. Rallies to the underside of these two averages have failed in the past several weeks.
On Friday, WBA took the path of least resistance and broke lower, nearly reaching its November low at $77. The daily On-Balance-Volume (OBV) line has been weakening since September and it made a new low in May, telling us that sellers of WBA have been more aggressive, with heavier trading volume on days when the stock has closed lower.
In the bottom panel of this chart, we do not yet have a bullish divergence between the price momentum study and the price action, and thus we cannot yet say that the decline is slowing.
In this three-year weekly chart of WBA, above, we can see how prices crossed the 40-week moving average line many, many times. In the past two months, however, WBA closed below the average line and rallies to the underside of the line have failed. The slope is just now turning negative.
The weekly OBV line has been neutral for over two years, with small jiggles up and down. A break to a new low for the OBV line would be a clue that prices were indeed set to move lower. In the lower panel is the Moving Average Convergence Divergence (MACD) oscillator, which recently moved below the zero line for an outright sell signal.
In this Point and Figure chart of WBA, above, we can see the long sideways price movement and the break of the $80 level. The $76 level is next support, and this chart projects a possible downside price target of $69.
Bottom line: WBA has declined $10 in the past two months, from $88 to $78, and this may be a shift from a sideways trend to a downtrend. It is hard to tell if $76 will be broken, but honestly, it does not look like strong support.