Confirmed Uptrend- Following chart (daily) goes back 7 years and it is clear in this chart that trend direction is from lower left to upper right, which indicates that underlying security is in an uptrend.
Critical price level- A long-term trendline which has proved itself as a strong resistance or support level are considered critical price level. In $COST chart you see clearly marked points on a Horizontal trendline @162.81
Point 1 – 12/8/2015 Advancing prices came to a halt and reversed at this point.
Point 2– Between 7/11/2016- 8/23/2016 there is a congestion zone where prices couldn’t break above previously defined resistance point 1 and eventually headed lower.
Point 3 &4– Price managed to break above the resistance line but soon reverse course and head lower only to hover around resistance line at 162.80. Notice at point 4 price seem to hit a ceiling until they break out. Later, resistance starts acting as support.
Point 5– after recent drop I expect the stock to find support at our price 162.81, before it makes its next big move.
However, If this support level doesn’t hold prices might head down to $146-$153. This price zone has previously acted as an important support and resistance zone.
Potential ABC Bullish candidate?
This area also serves as a potential retracement zone for ABC bullish pattern Where point 6 =A, point 7=B and and C will be somewhere in the highlighted area. If there is a point C in the highlighted zone BC will be equal to .62 to .76 of AB, which is a desirable number for ABC pattern to be proven valid.