Fashion retailers have not exactly been in a favorable spotlight lately. Like a lot of industries, brick and mortar stores are battling against a new enemy these days, online retailers. In my opinion, the ability for smaller clothier companies to compete online gives them a competitive advantage. Brick and mortar stores are so yesterday’s news. Or so everyone has thought.

People still like to hold things and try things on, then they typically go home to order the same product at cheaper prices through an internet site. sometimes it is the same store’s website, sometimes it may be a competitor’s website. Either way, having a combination of brick and mortar stores along with the right online presence appears to be the way to go. At least in the near-term.

The Buckle Incorporated (BKE) is one such fashion retailer trying to stay alive in a fluctuating industry. You can check out their official website here. Through a member request, I am reviewing The Buckle Incorporated (BKE) to determine a short and medium term outlook for the company’s share price. Let’s get started.

The Buckle Incorporated (BKE) – 20 Year Chart

Let’s start out with a 20 year monthly candlestick chart for the Buckle Incorporated (BKE). This helps to take a look at longer-term support and resistance areas.

The Buckle Incorporated (BKE) Developed a Bullish Engulfing Candlestick Pattern in November 2016, Is a Trend Reversal Close?

BKE has seen an increasing amount of selling pressure over the last 2 year period.

On this next chart, everything is the same except for the Fibonacci Retracement Tool. I kept Anchor Point #1 the same but moved Anchor Point #2 to the next support level below around the $15 area.

Trying to “Re-Fit” the Fibonacci Retracement Tool to Determine if the Downtrend Is Really Over

When a Fibonacci Retracement Tool is placed on a chart, you can have re-assurance that it is properly placed when the highest selling volume bar goes through the 50% Retracement Line. That was not the case with the first chart above. That is why I tried to re-adjust the Fibonacci Retracement Tool assuming its downtrend is not yet over.

This seems to be a better fit but would also suggest that BKE’s share price breaks below the $20 support area. It seems like a better fit because after breaking through the 50% Retracement Line and continuing to drop, BKE’s share price rebounded and attempted to re-take the 50% Retracement Line and failed. That is two different factors that suggest an ultimate los around the $15 area.

BKE – Short-Term Momentum

The short-term momentum for The Buckle Incorporated (BKE) is still in a downtrend. The MACD Histogram confirms that downtrend on this next 6 month daily candlestick chart. With a Falling Window candlestick pattern (gap-down) resistance area overhead and a Rising Window candlestick pattern (gap-up) support area below, BKE’s share price is “surrounded”.

Analyzing Gap-Ups & Gap-Downs Surrounding BKE’s Current Share Price

The MACD Histogram seems to indicate a test of the support area before a possible rebound and then re-testing the overhead resistance area.

With the increased amount of selling volume seen on this 6 month chart during BKE’s current pullback, a re-test of the lower support area seems appropriate first. Then, after another possible bullish reversal candlestick pattern develops in the same area as the Bullish Engulfing candlestick pattern, the share price may find enough momentum to rebound and re-test the overhead resistance area.

The Buckle Incorporated (BKE) – Summary

While the Buckle Incorporated (BKE) has flashed signs of nearing its downtrend, its monthly charts still suggest one last push downwards is possible and probable. Trying to catch a bottom can be tough, that is why it is imperative to use a scale-in process when purchasing shares of a company whose stock is still in a downtrend.

While BKE has flashed possible signs of a trend reversal, it is still in a confirmed downtrend and appears to need additional time on its side before its trend is ready to reverse.

At a minimum, wait for the re-test of the support area from the Bullish Engulfing candlestick pattern to complete before committing any additional capital towards this trade. The support area from the Bullish Engulfing candlestick pattern is around the $20 level.

The support areas listed below that can be used as scale-in purchase areas are the $22 level, the $20 level and the $15 level. However, based on the above analysis, the $15 – $20 range appears to offer the best entry point to go long on this clothing retailer. While BKE does appear to have an opportunity to rebound back towards the $30 – $33 area, the rebound may happen over a several month period. Purchasing shares as far below the $20 level is recommended in order to provide a risk to reward ratio that is favorable.