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Fan Yang

Walmart (WMT) Continues to Retreat; ABC Scenario

We looked at shares of Walmart (WMT) earlier in January when it was starting to break below a channel support and trying to extend a bearish correction.

As we wind down the month, we can see that the bearish extension did indeed extend lower. But where should we anticipate support from a technical analysis perspective?

Walmart Daily Chart 1/31
(click to enlarge)

ABC Scenario; Fibonacci Levels:
- The daily chart shows that the market is likely in an ABC correction.
- In this scenario, the A and C wave should be similar or have fibonacci relationships.
- In a A=C scenario, price should find support just above 64.00.
- If we anticipate C to be a 168% fibonacci extension of A, we should look for support around the psychological level of 60.00.
- We should also consider the 62.30-62.75 support pivot area.
- Finally, consider the 61.8% retracement of the 2016 rally. This key support level would be around 63.40.
- It does not seem any of these key fibonacci levels overlap, which would make a stronger case for that level to provide support.
- Instead, we should look at the 62-63 area as the central point of all these fibonacci levels. This is where I would anticipate support at. I would also limit the current bearish outlook to this area. 

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