Caterpillar was a top pick among investors for the rebound last year. But now the chart is showing several bearish patterns.
First is the string of lower highs over the last five weeks. CAT held support around $200 during that time, resulting in a potential descending triangle. Friday, interestingly, was the first close below $200 since February.
Second, the 50-day simple moving average (SMA) has dipped below the 200-day SMA: a death cross.
Third are the back-to-back inside weeks in late August, followed by two bearish candles. That suggests a period of consolidation has ended and a new downtrend may have begun:
Finally, the macro environment is potentially bearish for CAT as the U.S. dollar strengthens and China’s economy weakens.
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First is the string of lower highs over the last five weeks. CAT held support around $200 during that time, resulting in a potential descending triangle. Friday, interestingly, was the first close below $200 since February.
Second, the 50-day simple moving average (SMA) has dipped below the 200-day SMA: a death cross.
Third are the back-to-back inside weeks in late August, followed by two bearish candles. That suggests a period of consolidation has ended and a new downtrend may have begun:
Finally, the macro environment is potentially bearish for CAT as the U.S. dollar strengthens and China’s economy weakens.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
