Stock of the day: Costco
07 February 2023
In today’s stock of the day, we will update you on the situation with Costco. Previously, we analyzed this instrument at the beginning of December, when the price was inside of the symmetric triangle pattern and was heading south:
“At the end of November, buyers tried to escape from this formation to the upside but they failed, which created the false bullish breakout (blue). A false breakout is a clear signal to go in the opposite direction and that is exactly what happened here. Most probably, the price will now test the lower line of the triangle.”
Our prediction was spot on - the price kept falling and reached the lower line of the triangle on the first trading day of 2023. Since then, we have had a bullish bounce and a continuation of the movement inside of this triangle. Most recently, buyers almost broke the upper line of this pattern. In fact, we have two of them (blue and red) but in order to get a proper buy signal, we need to see the breakout of both of them. Chances of that are quite significant and that would be my base scenario for the forthcoming weeks.