Hi everyone! Today we’ll look at a stock that I’ve covered previously:
Wayfair Inc. (NYSE: W)
*This thesis differs from my previous newsletters on W. Consider this my most updated outlook on W for the coming months.
The weekly chart of W shows a consolidation symmetrical triangle pattern with lower highs and higher lows. This is more pronounced and less speculative than the inverse head and shoulder pattern that I had looked at a few weeks ago. A small hidden bullish divergence is forming, which is indicative of an impulsive move higher. RSI is largely following the pattern as well with lower highs and higher lows. Note that volume is decreasing but buyers are steadily accumulating on the way down.
On the daily chart, the hidden bullish divergence is a lot more pronounced. Notice the lopsided “W” formation with a near-term lower low that is forming while RSI makes a higher low. I can see a move back towards the 61.26 imbalance in the near-term, as the market continues to push higher overall. Accumulation has also been taking place around 48s, which if you zoom out, was a prior support level in the past.
In the event that W breaks below this 48 level, then the next support would be at the gap fill around 42-43, followed by the next gap around 37-38 and the last gap between 32-34. Note that a breakdown below all these levels could cumulate in all the downside gaps from the 28.11 2022 lows being filled, with a retest of the long-term green ascending trendline.
My long-term targets remain, and will be summarised below.
Sentiment: BUY
Summary (with Price Targets - NFA):
Consolidation symmetrical triangle pattern with lower highs and higher lows with a near-term target of 61.26 (imbalance), and eventually 91.95 in the longer-term (refer to last post on W).
Accumulation can take place at current levels or on any retest of the 48.15 level. A break below that will see support at 42-43, then 37-38 and subsequently 32-34 areas.
Note that we are approaching a weak window, so it’s possible that W will push to 61s and then consolidate during this period before breaking out post-weak window. I would exercise caution being too overweight on the long side.
All right, that’s it for today’s newsletter! See you in the next one :)
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