Under Armour is Ready to Forge Higher

Under Armour is displaying positive price action and technical indications on multiple timeframes.
By Robert Moreno ,

Under Armour (UA) - Get Report shares have over-powered the S&P 500 index by 54% since their 2013 low. The rise had been on a steady trajectory higher until late last year, when the stock pulled back to retest the two-year uptrend line and that formerly solid support failed to hold.

A low was made a month later at the 38% Fibonacci retracement level of its 2009 low and 2015 high, and the stock saw a strong reflexive bounce, returning back up to the trend line. This time the line, now acting as resistance, held, and the stock reversed back down to the earlier low in the $35 area.

Under Armour has been consolidating above this support for the last two months in a small horizontal channel pattern. Weekly moving average convergence/divergence has made a bullish crossover, and accumulation/distribution has been holding above its rising 21-period signal average. Last week's unusual price action saw channel support retested, followed by an 8% bounce that powered the stock through channel resistance, forming a strong bullish hammer-like weekly candle.

The price and money flow momentum indicators on the daily timeframe are in sync with the weekly indicators.  Moving average convergence/divergence and the relative strength index have been tracking higher since the end of May and are crossing their respective center lines. Accumulation/distribution crossed above its signal average in June about the same time Chaikin money flow moved into positive territory. These multiple timeframe confirmations suggest that the trend is higher and that there is buying power to sustain the move. The surge in price last week took out not only channel resistance but also the 50-day moving average, and the next levels of resistance are the 200-day average and the downtrend line drawn off the 2015 and 2016 highs.

Under Armour looks like a good risk/reward long candidate at its current level using a trailing percentage stop.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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