CSX Has Weakened in the Past Month - Ready for a Pullback?

 | Sep 14, 2018 | 2:55 PM EDT
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CSX Corp. (CSX) was reviewed one month ago where I wrote that "CSX might see a short-term limited correction but it is just part of a normal bull move. The rally looks in good shape as long as support around $64 is not broken. $86 is our next upside price target."

The price of CSX touched $76 last month and has weakened slightly. A fresh look at the charts and indicators may result in a new strategy. Let's check.

(For more on CSX, see The Apple Revolution: Cramer's 'Mad Money' Recap.)

In this daily bar chart of CSX, below, we can see that prices are rolling over towards the rising 50-day moving average line. The 200-day average line is well below the market and intersects around $62.

The daily On-Balance-Volume (OBV) line shows a decline from late August and tells us that sellers of CSX have become more aggressive.

The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the downside last month giving us a take profits sell signal.

In this weekly bar chart of CSX, below, we can see some weakness developing.

Prices are still well above the rising 40-week moving average line but the weekly OBV line has peaked and the MACD oscillator is very close to a weekly take profits sell signal.

In this Point and Figure chart of CSX, below, we can see that prices have reached a price target and that might prompt some profit taking.

Bottom line strategy: Prices and indicators look weaker than they did a month ago. Traders should be prepared for a decline and test of support in the $68-$66 area.

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