Shares of Whole Foods Market (WFM) have been trading in a clearly defined cyclical pattern and a Fibonacci sequence measured off their 2008 low, which suggests the stock price is headed higher over the short term and could potentially close a long-term price gap.
A Fibonacci grid using two types of Fibonacci tools is overlaid on the weekly chart. The dark vertical lines are Fibonacci time lines, and they mark the number of trading days in the well-known number sequence, in this case, initiating at the 2008 low. The resulting Fibonacci points highlight important lows in the stock price and would have been good long entry points. The stock made its most recent low at day 144 in the sequence which coincided with another test of channel support. The horizontal green lines are the more familiar Fibonacci retracement levels, and the consolidation channel the stock has been in for the past seven months has been bounded by the 50% and 62% retracement levels of the 2008 and 2013 range. On this timeframe, moving average convergence/divergence has been tracking higher since last August and Chaikin money flow moved into positive territory just after the last time sequence low. These indications reflect improving price and money flow momentum, at time and price points where the stock is scheduled to move higher.
The daily chart is annotated with a simple series of vertical cycle lines. The green lines mark cycle lows and the red lines mark cycle highs, and interestingly, both are of equal duration at 54 days per individual cycle. Last week, the stock made another cycle low, and if the pattern repeats, there will be another retest of the channel top at the end of May. There are other bullish indications on the daily chart, with the relative strength index moving above its 21 period average and preparing to cross over its centerline, and the bullish crossover on the moving average convergence/divergence oscillator. Accumulation/distribution is above its signal line, and Chaikin money flow has cycled back into positive territory.
Whole Foods is coming off a channel bottom retest, a 54 day cycle low, and a Fibonacci number sequence day. The technical stage is set for a run up to a retest of channel resistance at the next cycle high point in late May, and the potential exists for a pattern breakout that projects a move that would close the large July 2015 gap.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.