Walmart (WMT) - Get Report shares have been in a primary downtrend since the beginning of the year and are off 27% in that time.

There have been periods of narrow range consolidation interspersed in the move lower, and several of these have taken the form of horizontal channels. Over the last month, the stock has been moving in another channel pattern and is currently back above its 50-day moving average.

The trend must be respected, but a short-term countertrend trade may be setting up on the Walmart chart -- and those can be highly profitable.

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The most recent channel pattern resembles consolidations seen in July through August and then again in September, and technical indications were similar to the current technical condition. Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator, and on both timeframes, it is above its centerline. The relative strength index has been moving higher above a rising 21-period signal line and is back over its centerline.

These indicators reflect the improvement in positive price momentum since the November low.

Volume usually lags initial price momentum, but the money flow index, a volume-weighted relative strength measure, has moved back up over its centerline and 21-period signal average. Chaikin money flow, a 21-period average of the accumulation/distribution line, is still in negative territory but back above its signal line.

In those previous examples of channel consolidation, the speculative countertrend trade was never triggered, but the trading parameters are still the same: The stock is a speculative buy after a break above channel resistance, trailing a tight percentage stop. The primary trend has to be respected, so the strategy behind this short-term trade is a quick profit or loss.

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