Dollarama (Friday’s close $53.94) had a major up-trend from $23.43 in January, 2016, (not shown) to $56.67 in February, 2018, (A) then reversed the trend when it declined below its 40-week Moving Average (40wMA – B).
For the next three years the stock remained in a large bullish price pattern (a “W” formation - solid lines) and also ran into resistance at the neckline of this pattern near $55 (dotted line).
The recent rise to $58.53 signalled a breakout and the start of a new up-trend toward higher targets (C). Behaviour indicators including the rising 40wMA confirm the bullish status. The current minor correction provides a good entry level; only a sustained decline below $51-52 would be negative.
Point & Figure measurements provide targets of $64 and $69. The large “W” pattern (solid lines) supports higher targets.
Monica Rizk is the senior Technical Analyst and Ron Meisels is the president of Phases & Cycles Inc. (www.phases-cycles.com). And he tweets at @Ronsbriefs. They may hold shares in companies profiled.
Chart source: www.decisionplus.com
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