Sketching a divergence starring Skechers

There are many different elements to a stock chart that technicians look for during review. Here are some common ones:

  • Moving Averages
  • Trend Lines
  • Resistance
  • Support
  • Volume
  • RSI

The element that I would like to discuss today is Divergence. To illustrate this, I bring you a basic chart of $SKX:

SKX_basic

Now let me add a few trend lines to highlight the divergence:

SKX_divergence

As price tried to make a run at the $35 Resistance, RSI came up well short of the 70 level (overbought) that it saw when price made that price high in December 2013. This would have been a nice tell that the price strength to start the year was weak.

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