Wednesday sees more retail earnings, this time from Dollar Tree (DLTR) and American Eagle Outfitters (AEO) . Jim Cramer expects good things from both. Let's focus on the charts of DLTR.
We looked at DLTR recently on January 5 and wrote that "DLTR may or may not pull back to fill the late November price gap and retest the prior resistance around $100. If DLTR does pullback in the next few weeks, aggressive traders should consider that a buying opportunity for 2021."
Prices have just about filled that gap so let's look at DLTR again today.
In this daily bar chart of DLTR, below, we can see that prices have declined since our last review. The gap is filled and prices are testing the rising 200-day moving average line. The slope of the 50-day moving average line has turned negative.
The On-Balance-Volume (OBV) line shows a bearish trend from the middle of December. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line in bearish territory.
In this weekly Japanese candlestick chart of DLTR, below, we can see a large red (bearish) candle pattern as prices have declined to test the rising 40-week moving average line.
The weekly OBV line shows weakness the past three months. The weekly MACD oscillator has crossed to the downside for a take profit sell signal.
In this daily Point and Figure chart of DLTR, below, we can see a potential downside price target in the $86 area, however, we can see plenty of potential support.
Bottom line strategy: It does not look like DLTR is finished with its current decline. Wednesday's earnings could be pivotal but I do not feel confident in recommending a purchase just yet.
