Shares of Membership warehouse retailer Costco ( COST) have moved sideways for months. The stock has traced out a really large triangle formation since last April and prices have come close to the apex of the pattern.
Let's review the charts and indicators to see when COST might breakout and in what direction.
In the daily bar chart of COST, below, I see a large equilateral triangle formation -- lower highs and higher lows going back to April. Prices have made a tighter and tighter trading range. Trading volume has declined slightly from May.
The On-Balance-Volume (OBV) line has also moved sideways the past 12 months. The Moving Average Convergence Divergence (MACD) oscillator has moved around the zero line the past year.
In the weekly Japanese candlestick chart of COST, below, it is easier to see the triangle pattern. Right? COST is trading below the rising 40-week moving average line.
The OBV line shows a decline from April 2022. The MACD oscillator is below the zero line.
In this daily Point and Figure chart of COST, below, I can see an upside price target in the $555 area.
In this weekly Point and Figure chart of COST, below, I can see an upside price target in the $560 area.
In this second Point and Figure chart of COST, below, I used a five-box reversal filter. It suggests a price target in the $781 area.
Bottom-line strategy: Triangle formations are considered continuation patterns meaning they typically continue the trend prior to the forming of the pattern. COST was in a longer-term uptrend from 2014. Ideally, COST should break out on the upside from this weekly equilateral triangle pattern. Go long above $510 and risk to $464.
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