On April 6th, 2015, FedEx stock was trading near $166 per share, but in “FedEx Bulls Not Giving Up Yet” we shared out thoughts about a highly probable new top in wave 5 of (3). According to the Elliott Wave Principle, FedEx was supposed to climb above the 184-dollar mark in the near term. You can see the analysis on the chart below.
In other words, we were expecting a 20-dollar rally first, before the natural wave (4) to the south begins. The above-shown chart was all we needed to take the bullish side. The next chart shows what happened next and how FedEx looks like today.
As you can seen, wave 5 of (3) led prices as high as $185.17. Soon after that, the stock started declining. On August 24th, the “Black Monday”, FedEx fell to $142.50. The theory states, that every five-wave impulse is followed by a correction in the opposite direction. In this case here, wave (3) was the impulse and the following sell-off is nothing more than a natural wave (4) retracement.
What to expect from now on? As visible on the chart, FedEx stock price is approaching the 38.2% Fibonacci level as well as the lower line of a trend channel. This means we could expect the zone between $135 and $145 to provide enough support for wave (5) up to begin. Of course, wave (4) might extend in time, which will postpone the anticipated rally, but as long as the mentioned support area holds, FedEx’s uptrend is far from over.
