Home Depot Near the Top of its Trading Range

 | Sep 11, 2017 | 11:27 AM EDT
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Home Depot (HD) is a member of the Dow Jones Industrial Average (DJIA) and we reviewed its charts and indicators last month, (), and we concluded that, "unless we get a strong close above $156 on HD, the downward drift is likely to continue. A close below $145 will break the 200-day average line as well as support around $145 from March, April and July."

In the short time since tale end of August, HD has rallied back to its May zenith just above $160. Prices are above the now rising 50-day simple moving average line. Prices are also comfortably above the rising 200-day moving average line. The daily On-Balance-Volume (OBV) line corrected to the downside from May to late July. The OBV line has improved from its July lower but it has not retested nor bested its May zenith. The Moving Average Convergence Divergence (MACD) oscillator crossed to the upside in late August to give us a cover shorts buy signal below the zero line and the oscillator crossed above the zero line last week for an outright go long signal.

In this weekly bar chart of HD, below, we can see that prices are still above the rising 40-week moving average line after tests of the average line in July and August. The weekly OBV line has edged a little higher in the past couple of weeks but it is still off its best levels. The MACD oscillator on this time frame is close to a bullish crossover and fresh go long signal.

In this point and figure chart of HD, below, we can see that prices have made a small double top at $158.79 but that $161.16 will be an upside breakout. A longer-term bullish price target of $239.37 is projected.

Bottom line -- HD could make a new high close above $160 and we would have to be impressed, but at this point in time we want to operate on the buy the rumor and sell the news mentality. If HD breaks out to a new high close the next upside target would be the $175 area which is derived from taking the height of the recent sideways trading range and adding it to the breakout point. If HD turned back down again, a retest of the $150-$145 area would be anticipated.

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