AFLAC (AFL) has catchy TV commercials that nearly everyone remembers, but shares of the insurer could get plucked a bit in the weeks ahead. AFL more than doubled from its late-2011 low, as seen in the chart below.
The few weeks it spent above $65 has marked the zenith, so far. AFL corrected down to the $55 level and then crawled back to $65 -- just below the prior late 2013 peak. Volume on this second rally attempt was weaker than the first "upthrust." This price action of twin peaks at approximately the same level separated by about a 10% pullback is better known to chartists as a double top formation. This large top formation spans nearly two years in duration so a meaningful decline should unfold.
For a price target, technicians take the height of the pattern -- the distance from the trough to an imaginary line drawn across the two peaks. This distance in dollars (or index points) is subtracted from the trough. For AFL, the height of the pattern is $10 to $11 -- and, deducted from $55, gives us a $45 to $44 price target. Not the end of the world, but remember a 50% decline needs a 100% return to get you back to even!
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