Technical Look at Nike (NKE) & the US Dollar ~ market folly

Monday, March 29, 2010

Technical Look at Nike (NKE) & the US Dollar

Adam over at Marketclub recently put out a technical analysis video on Nike (NKE) and he notes an interesting pattern. NKE recently broke out of a trading range and 'energy field' as he calls it. Nike consolidated in early 2009 and formed almost a reverse head and shoulders that helped propel it to new highs recently. Adam points out that the stock should technically have a price target of $90 now based on its move. With Nike currently trading in the mid $70's, that's some impressive upside.

In the video, he thinks shares have compelling risk reward currently as he outlines $72 as a nice level for your stops. If it falls below that level, exit and look for a better opportunity. We'd actually go a step further and put stops right below the gap at $70 as gaps often seem to fill on charts. So, it would make sense for NKE to consolidate back down to that level before resuming its trend higher. You can watch the video here.

Next, Adam examined the US Dollar index and wondered if it is going higher. In his US dollar video analysis, he notes that the dollar has been heading higher overall since 2010 began. He also draws out the pattern of a stair-stepping move where the dollar is exuding cyclical action. Applying that pattern to current dollar trading action, Adam hypothesizes that the dollar has an $83.90 target price, implying further upside to come. He notes that all of his signals are currently bullish (MACD, trade triangles, trend, etc) and to look for the dollar index to hit that price target relatively soon. You can watch the video by clicking the chart below:

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