Featured Trade (U.S Stock): Potential bearish setup in FedEx

FedEx has reached an inflection zone for a potential medium-term bearish reversal.

In our previous “deep-dive” technical analysis report titled “Global stocks are more likely to be climbing up a slippery wall of worry” published on 23 Jan 2019” (click here for details), we had highlighted 4 key barometer stocks to watch and FedEx Corp (FDX) is one of them.

Let’s us now review the latest technical elements of FDX.

Medium-term technical outlook (1-3 weeks) on FedEx (FDX)



click to enlarge charts

Key technical elements

  • The on-going rally of 23% has reached a key medium-term resistance zone of 182.95/187.04 which is defined by a confluence of elements. The pull-back resistance of a former major/primary ascending channel support from Oct 2011 low, former major swing high areas of Dec 2014/Jun 2015, 38.2% Fibonacci retracement of the prior steep decline from 03 Dec 2018 high to 26 Dec 2018 low.
  • Bullish exhaustion signals have started to emerge at the 182.95/187.04 resistance. The prior 2 weeks of price action, the stock price has formed a weekly “Spinning Top” followed by “Shooting Star” candlestick patterns. Since its 171.28 low of 23 Jan 2019, the price action has started to evolve into “Expanding Wedge” range configuration where a test on its upper boundary on 13 Feb 2019 has been associated with a bearish divergence signal seen in the daily RSI oscillator.
  • The “gapped down” formed on 18/19 Dec 2019 (earnings downgrade) has been filled.

Key Levels (1 to 3 weeks)

Pivot (key resistance): 187.04

Supports: 176.90 & 164.70/163.10

Next resistance: 209.20

Conclusion

The key medium-term pivotal resistance to watch for FDX will be at 187.04 and a break below 176.90 (lower boundary of the “Expanding Wedge”) is likely to trigger a potential down move to target the next support at 164.70/163.10 (61.8% Fibonacci retracement of the current rally from 26 Dec 2018 low to 13 Feb 2019 high & former congestion area of 27 Dec 2018/03 Jan 2019).

On the other hand, a clearance above 187.04 invalidates the bearish scenario for an extension of the corrective rebound towards the next resistance at 209.20.

Charts are from eSignal



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