Under Armour Class C stock (NYSE: UA) surged on the 30th of October after the company reported earnings that exceeded analysts’ expectations. The stock opened with a positive gap above the upper end of the falling wedge that had been containing the price action since the 29th of June, and has been trading above that boundary since then. On the 5th of November, the price hit resistance near 22.20 and retreated, but the slide was stopped near 20.22 and then the share rebounded again. In our view, this keeps the near-term outlook cautiously positive.
We expect the bulls to aim for another test near 22.22 soon, or near the 22.60 territory, which acted as a strong resistance from the 6th until the 29th of June. That said, we would like to see a decisive close above that zone before we get confident on larger bullish extensions. Such a break is likely to bring the stock into territories not seen after the 31st of January 2017, when the sportswear maker reported lower-than-anticipated quarterly sales and announced that its back-then CFO will step down. Our next resistance is market by the low of the 23rd of January 2017, at around 24.35.
On the downside, we would like to see a clear dip back below 19.64 before we abandon the bullish case and take the sidelines. Such a dip could allow the share to slide towards the 18.06 barrier, defined by the high of the 17th of October. Another break below 18.06 could open the path for the stock to test the 17.20 level, or the upper bound of the wedge as a support this time.
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