Earnings Play: Ulta Beauty

Ulta Beauty is coming to the end of a symmetrical triangle pattern.

On Thursday, after market, Ulta Beauty (ULTA) is expected to release second quarter EPS of $0.13 compared to $2.76 the prior year on sales of approximately $1.2 billion vs. $1.7 billion last year. The company operates of a chain of beauty retailers and its expected move based on front-month options is 8.8%.    

Looking at a daily chart, Ulta Beauty's stock price is coming to the end of a symmetrical triangle pattern that price has been consolidating within for the majority of 2020. A symmetrical triangle pattern is more often considered as a continuation pattern as opposed to a trend reversal pattern, and Ulta's stock price has been in a downtrend since mid-2019. Price is will probably hold under the upper trendline before breaking down to 203.00. If price penetrates 203.00 and the lower trendline, it will likely gain momentum and fall to 186.00. However, if price manages to break above the upper trendline it could reach for resistance at 229.00. If price can get above 229.00, it could be the beginning of a new long-term uptrend. Regardless of which direction price breaks out, it will likely be a large move.  

Source: GAIN Capital, TradingView

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