Charting Of Fossil And S&P Retail Index

Fossil (FOSL) appears is trading in a range on declining volume. Short-term support is at $28 and long-term resistance is at $31. It appears that FOSL is forming a symmetrical triangle within a larger neutral range. A breakout at $32 is considered bullish and a continuation of an uptrend and a breakdown under $28 is considered bearish and signals a reversal. Both actions should accompany high volume. The most obvious characteristic of neutral range-bound trading is between the 50-day MA (blue line) and 200-day MA (red line).

The S&P Retail Index (^RLX) is still in a confirmed uptrend without any major breaks. There is strong resistance at 425 and the index may consolidate for several weeks. The retail sector is currently outperforming the S&P as a whole and is demonstrating strong leadership. Notice how FOSL is slightly divergent from the index? If the retail index breaks above resistance and continues to move up, there’s a high likelihood that FOSL will breakout to the upside almost immediately so watch out for it.

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