Under Armour (NYSE: UAA) opened with a negative gap on Wednesday, to break below the upside support line drawn from the low of October 28th. The price structure on the 4-hour chart has been lower highs and lower lows since the stock hit a 22-month high on May 5th, at 26.45. In our view, the break below the upside line may have increased the chances for further declines, but in order to get more confident on that front, we would like to see a slide below the low of April 20th, at 20.70.
If such a break occurs, more investors may abandon the stock, thereby allowing the slide to continue towards the 19.60 area, defined as a support by the inside swing high of January 21st. If that barrier is not able to hold either, then we could experience declines towards the 18.20 barrier, marked by the inside swing high of January 28th, or towards the 17.25 zone, marked by the low of the day after.
Taking a look at our short-term oscillators, we see that the RSI drifted lower after it hit resistance at its 50 line, while the MACD, already negative, has just touched its toe below its trigger line. Both indicators detect increasing downside momentum and support the notion for this stock to continue drifting south for a while more.
In order to start examining whether investors got interested again in Under Armour, we would like to see a recovery back above 23.35. Such a move would also take the stock back above the aforementioned upside line and may initially pave the way towards the 25.22 hurdle, marked by the high of May 7th. If new participants are willing to buy even at that price, then a break higher may pave the way towards the peak of May 5th, at 26.45.
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