January 26 Chart of the Day - Colgate-Palmolive
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Colgate-Palmolive (CL) shares are higher today after the consumer products company delivered better than anticipated results for the fourth quarter.
We wanted to take a look at their chart from a price action technical analysis perspective and boy did we like what we saw!
Starting on the monthly chart we applied only support/resistance and trend. What we call a "basic structure" chart in our online courses.
We can see that price has historically carved out a stair stepped ladder of higher highs and higher lows for the past couple of decades moving pretty much in a level to level fashion.
When we were first learning how to chart and trade our mentor/instructor made us trade for over 3 months only using support/resistance and trend. And if you can get good at just trading with those tools it only seems to get easier when you layer in more tools like Fibonacci!.
Down on the weekly chart we were able to identify a change control zone roughly between $71.50 and $72.50.
Change control zones are one of the five price action tools we teach when charting anything. By definition, they are an area that represents where neither the bulls nor bears are in charge. Price can slash though the zone with seemingly reckless abandon, price can respect the top or bottom from outside it or within it. Or, price can trade aimlessly sideways within it. When price breaks away from the zone it can often get drawn back to it like a magnet. And in this case we see all of the above are true.
We also applied Fibonacci levels to further help identify levels of interest. Price seemingly has an upcoming decision to make if / when it reaches the upper bear trend line.
So the question remains will price continue to make higher highs on the monthly view or has the long term up trend changed?
Only time will tell for sure but in the meantime both investors and traders can use these charts to formulate their respective plans.
So what's next?
We don't make predictions...
Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.
- Support/Resistance
- Trend
- Fibonacci
- Supply/Demand Zones,
- Change Control Zones
Take a look at the charts and let us know what you think.
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