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When we reviewed the charts of NUE back on March 25 we wrote that, "If you are still long NUE from our October recommendation -- great. If you took profits on the trade that is fine too. Traders could look to rebuy NUE on a decline to the $64-$60 area or add to longs if that is the case. Risk to $55. Longer-term our next price targets are the round number of $100 and then the $114 area."
Let's see what is going on today.
In the updated daily bar chart of NUE, below, we can see that prices did not dip much in late March to give us a better buying opportunity. The shares gapped up into late March and then formed a falling flag formation. Flags are continuation patterns which means that most of the time they continue the trend before the pattern which in this case was up. Prices are above the rising 50-day moving average line and above the rising 200-day line.
The On-Balance-Volume (OBV) line and the volume histogram right below the price chart show some weakness. A declining volume picture is typical for a flag pattern as the constricted trading range means there is less opportunity to make money and thus active traders tend to go elsewhere for opportunities.
The Moving Average Convergence Divergence (MACD) oscillator is pointed down but it has started to narrow.
In this weekly Japanese candlestick chart of NUE, below, we see a bullish picture. Prices are in a longer-term uptrend above the rising 40-week moving average line. Last week's candle bar shows a lower shadow telling us that traders rejected the lows.
The weekly OBV line shows a long move higher the past twelve months but a slight decline so far this month - overall positive. The MACD oscillator is bullish but does show a little narrowing.
In this daily Point and Figure chart of NUE, below, shows a possible downside price target of $74 but also that a trade at $83 will be a new high and breakout.
In this weekly Point and Figure chart of NUE, below, we used weekly close-only price data and a percent change scaling. Here the chart suggests a price target in the $142 area.
Bottom-line strategy: The charts of NUE are bullish. Pullbacks have been relatively shallow and have not allowed us to buy NUE at the price we wished. Plan B is to buy strength to $83 and higher. Our targets are $100, then $114. The $142 area is our longer-term price objective. Risk to $73 for now.