Shares of the medical supplies and diagnostic products company have retraced 50% of their August-to-September decline, in the process forming an inverse head-and-shoulders reversal pattern, with neckline resistance in the $141.50 area. In addition to being a Fibonacci retracement, this resistance level is the current position of the flat-trending 200-day moving average.
There have been two sets of higher highs and higher lows since the head of the pattern formed, with the last sitting on 50-day moving average support. The relative strength index and moving average convergence/divergence have crossed above their centerlines, indicating positive price momentum.
The Aroon indicator is designed to identify the start of trends using crossovers of its Aroon-Up line, a measure of the number of days since a 25-day high, and the Aroon-Down line, a measure of the number of days since a 25-day low. Unlike other momentum indicators that use price relative to time, it uses time relative to price. The bullish Aroon crossover suggests the start of a new uptrend.
At the bottom of the chart are the accumulation/distribution line and Chaikin money flow, which is a 21-period average of the A/D line, and readings on both indicators suggest the stock has been under accumulation this month.
Becton Dickinson is seeing positive price momentum and continuing buying interest as it tests a key breakout level, and is a long candidate after an upper-candle close above neckline resistance using a trailing percentage stop.