Check out this chart…it’s purple.

10/20/2022

We have a theme in today’s edition of Before the Bell

I’ve talked a ton about the past year’s market obliteration and the geopolitical factors that affect us all, but it’s about time we start looking at potential trades for the upside for when things eventually turn around.

And one that I’ve monitored on and off could be rounding the corner soon…

(Source: giphy.com)

I’m talking about Purple Innovation, Inc. (PRPL).

Why? The holiday season is upon us and I’ve always been a fan of retail goods which includes this stock (bed mattresses).

And when you see this chart, we’re looking at some solid support…

Here’s the chart:

Above is the daily…

Look at that base!

I like this view and I keep a running list of potential reversal trades from a wide, rounding bottom.

However, it needs a higher high and low first… This is how I nailed Jumia Technologies (JMIA) under $10.00 before it ran to all-time highs.

II’ve circled two areas to take into consideration.

First, the gap around ~$18.00… and a sizable one at that.

Second, the nearly six month base with multiple touches around $2.65.

Rogue Investing’s Chris Hood built the Alpha Waves tool to show us what the momentum looks like along with overall direction (and buy or sell alerts).

The first question I’m asking is where’s the composite Stochastic (multi-colored line)? Red and pointing downward.

This, combined with the histogram ebbing lower along with the series of four red dots, tells us the price is likely headed down first.

I’ve marked a thumbs down above the yellow squeeze down signal…

My target to begin scaling in would be around the green order block where buyers recently stepped in with high demand…

Little by little, of course, but if $2.65 fails, I’d hop out…

Now, if you want to play it on confirmation, I’d look for a break above the dotted red line around ~$4.50 with strength. That’s the Resistance.

You want a big break to the upside with a bullish candle stick.

In the meantime, this could be a great range for swing traders if it stays in this area…

Start looking for turnaround ideas!

Keep moving,

(Disclosure: I hold no position in PRPL but intend to initiate a position in the next 30 days.)

This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.

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