Bitcoin sets a new all-time high above $6,000 >>> READ MORE

Momentum Favors Longs in Coach (COH)

COH still has upside ahead in a tight trading pattern


Fashion accessories firm Coach (NYSE:COH) has seen an impressive 17.50% rally over the past three weeks as both U.S. and European stock markets pushed sharply higher.  Even though medium-term overbought, the stock still looks to have another 4 %- 5% left to go until better resistance is reached.

coh multi year chart
Click to Enlarge
On the multi-year chart at right, Coach had reached a scary support level back in late February, where any break below could have accelerated the downside move.  It doesn’t take too much imagination to envision a big head and shoulders formation in the stock, with the neck-line representing the crucial support level.  Instead of breaking below support, however, the forces that be came to rescue and quickly lifted the stock , which eventually led to the previous weeks’ sharp rally.

After a sharp rally, thanks in good part to the stock’s April 23 post-earnings announcement pop, the stock consolidated the move for the first week and a half of May.  Last Friday, May 10 however, Coach rallied 1.66% on the day and in so doing pushed past a crucial near-term resistance zone near $59, which served as the upper end of a tight pattern.  This sort of tight trading pattern is exactly what I am looking for in the current environment where the broader U.S. stock market is likely fairly extended in the medium term, yet tight stock patterns still stand a chance of breaking higher.

COH daily chart
Click to Enlarge
Given last Friday’s break past the $59 resistance point, the path is now clear for a move up to next resistance which lies between $62.00 and $63.20.  Momentum favors longs in COH still, yet any meaningful one-day bearish reversals will need to be taken seriously.

Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.

Article printed from InvestorPlace Media,

©2017 InvestorPlace Media, LLC