American Eagle Outfitters May Be Ready to Soar

• Posted by Greg Harmon
• on February 9th, 2015

Teen retailers go in and out of fashion quickly. But from the start of 2013 until mid 2014 all of them seemed to be out of fashion. Abercrombie & Fitch has been the poster child for weak teen retailers and it keeps heading lower. But one teen retailer seems to be ready to rise from the ashes. Like a Phoenix, no wait, an Eagle.

American Eagle Outfitters ($AEO) went through that long harsh pullback. It lost almost 60% of its value from the 2012 high. But since making a double bottom over last summer it has moved higher and is consolidating under resistance. The price action since September has made for an expanding wedge and the price now sits at the top of the wedge.

Since the start of 2015 it has settled in a tight channel in that wedge, over the 50 day SMA between 13.60 and 14.80. A move over 14.80 has the 38.2% retracement of the move lower at 15.43 and then resistance at 16.60. The momentum indicators have been biding time, but not fading. The RSI is over the mid line, holding under 60 while the MACD is flat, oscillating around the signal line.

These may give a clue for a break out before price does, but wait for price to confirm before you try to Fly like an Eagle. Other wise you might might see yourself crash like Icarus at a failed move higher and crash back down.

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