The Clorox Company (CLX) is set to report their latest quarterly numbers after the close of trading this Monday. Let's check on the charts.
In this daily bar chart of CLX, below, we can see a few positive clues. Yes, prices are still in a downtrend and are trading below the declining 50-day moving average line and the bearish 200-day moving average line, but these are lagging indicators. The downside gap and very heavy trading volume in early August may be considered a "throw in the towel" trade as discouraged longs dumped positions.
The On-Balance-Volume (OBV) line has been in a decline from the end of January but the 12-day price momentum study shows us higher lows from August. This is a bullish divergence when compared to prices making lower lows and can foreshadow a price reversal as the pace of the decline has slowed down.
In this weekly Japanese candlestick chart of CLX, below, we can see a recent hammer-like bottom reversal pattern. I use the term hammer-like as the lower shadow could be a little longer but it still may be good enough to mark a bottom reversal.
The weekly OBV line is pointed down, however the 12-week price momentum study shows us a bullish divergence when compared to the price action.
In this daily Point and Figure chart of CLX, below, we can see that prices have reached a downside price target.
In this weekly Point and Figure chart of CLX, below, we see that price also reached a downside price target.
Bottom line strategy: CLX has been in a long downtrend but we have pointed out that the pace of the decline has slowed and a hammer pattern is visible on the weekly candlestick chart and downside price targets have been reached. Traders should not be short CLX ahead of earnings and aggressive traders could "nimble on the long side" with the understanding that I have no special knowledge of the upcoming numbers.
