Shares of Walgreens Boots Alliance (WBA) - Get Report broke above their 50-day moving average last week, and on Tuesday they broke above their 200-day average. Technical indications suggest they are likely to continue their upward trajectory over the intermediate term.
The stock has been making a series of higher lows under horizontal resistance in the $85 level for the last month, causing range and, consequently, Bollinger bandwidth compression. The Bollinger bandwidth indicator at the bottom of the chart is at a level of compression similar to the one seen in August, which preceded a volatile move in price. Technical indications are that a second sharp move will be to the upside.
Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator, and on both timeframes, it is moving above its center line. This coordinated positive price momentum and trend direction is bullish for the stock for at least the intermediate term. The relative strength index is above both its 21-period average and center line, reinforcing the the momentum outlook.
On the money flow side, the money flow index, a volume-weighted relative strength measure, is also above both its signal average and center line, reflecting accumulation in the stock during this recent consolidation phase. Overall volume has been a problem for the broad market over the last two weeks and will need to improve to support a continuation of the break out move.
Walgreens is a long candidate at its current level using an initial percentage stop under the 50-day moving average.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.