technical analysis NKE

Technical analysis of NKE

NKE, the representative CFD based on Nike, Inc’s shares, has made gains this month so far and is currently retesting its latest all-time high around $146. Recovery in demand among consumers and something of a shift away from strongly overvalued tech shares have boosted NKE and various other retail and similar shares so far this year. This technical analysis of NKE looks at the four-hour chart ahead of Nike’s earnings report after hours today.

Nike’s actual price:earnings ratio (‘PE’) for 2020 was 78, making it among the more overvalued major non-tech shares. PE is expected to drop to about 48 this year. Earnings reports last year were overall quite positive, with Q3 and Q4 both yielding significantly higher earnings per share (‘EPS’) than the consensus.

Back on the chart, the clearest resistance is the latest high around $146 which price continues to test this week. This area has been tested several times since just before Christmas. Low support appears to be the latest low around $130.

Technical indicators on NKE H4

 

Moving averages give a sell signal. Although all of the 50, 100 and 200 SMAs are below the price, faster lines are successively below slower. The fairly small value area between the three lines is the key support in focus from moving averages.

As of yesterday’s close the strong overbought signal remains. The slow stochastic (15, 5, 5) at about 92 is close to the maximum reading while price is slightly outside the upper deviation of Bollinger Bands (50, 0, 2). As is usual for a CFD on an individual share, buying volume dominates selling.

Price action and Fibonacci

 

The sideways trend for NKE since December has been very strong, with resistance at the top of the channel around $146 having been tested four times and support around $130 tested twice. Momentum is very low this week, typical in the context of participants awaiting tonight’s earnings report.

Price has not followed the daily Fibonacci fan closely so far this year. The 61.8% area might be a very general area of support. Meanwhile some traders might consider the 38.2% zone of the fan which is currently just above $150 to be a potential area for targets.

Technical analysis of NKE: summary

 

Nike’s earnings report for the fiscal quarter ending February 2021 is expected on Thursday 18 March after hours. The consensus estimate for EPS is 75c, with the 12 estimates ranging from 64c to 83c and one upward revision in the last four weeks.

The technical picture for NKE overall favours continuation of the current sideways trend, so on this basis alone a breakout upward tomorrow is unfavourable. However, for any CFD on an individual share, fundamentals like earnings reports are critically important and often likely to invalidate TA, so gains can be expected unless the actual EPS misses the consensus significantly.

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