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The Bullish Case for Five Below

An ascending triangle pattern has formed in the chart of Five Below (FIVE). This is considered a bullish pattern. If the stock breaks through the resistance, a breakout could soon occur. Read more to learn how to take advantage of this trade.

An ascending triangle pattern has emerged in the chart of Five Below (FIVE).  This is a bullish pattern and if the resistance level is surpassed, a breakout could occur.

FIVE is a value-oriented retailer that operates over 900 stores in the United States. Catering to teen and preteen consumers, stores feature a wide variety of merchandise, the vast majority of which is priced at or below $6.

The company has been focused on enhancing its merchandise assortment, improving its supply chain, and strengthening its digital capabilities. It is also working on expanding its store base and enhancing the in-store experience to drive more traffic.

FIVE has a healthy balance sheet with a current ratio of 1.4, indicating it has enough liquidity to handle short-term obligations. While growth struggled over the past year, earnings are forecasted to rise 144% in the current quarter.

Due to its growth expectations, the stock is trading at a fairly high multiple with a forward P/E of 46.51. The stock has also shown recent positive momentum, leading to a Momentum Grade of B in our POWR Ratings, and represented by the chart below.

Take a look at the 1-year chart of FIVE below with my added notations:

  Chart of FIVE provided by TradingView

Over the past two months, FIVE has hit the $197.50 resistance (red) on multiple occasions, while also forming a trend line of support (green). Together, these two lines have created an ascending triangle.

A long trade could be made on a break above the $197.50 resistance level.

Want to Discover More Great Trades?

I have explored virtually every flavor of technical analysis and chart pattern known to mankind. The sad fact is that the vast majority of them don’t work at all.

That is why I recently put together this special report to help investors focus on the only 5 chart patterns that matter…the ones that lead to the most timely and profitable stock trades. Click below to get your copy now!

5 WINNING Stock Chart Patterns

Have a good trading day!

Good luck!

Christian Tharp, CMT

@cmtstockcoach


FIVE shares were unchanged in premarket trading Tuesday. Year-to-date, FIVE has gained 10.92%, versus a 4.10% rise in the benchmark S&P 500 index during the same period.



About the Author: Christian Tharp

I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing.

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