PVH (PVH) shares have rallied over 40% this year, tracking above a rising 50-day moving average to their September high. That positive momentum has moderated over the last month and the trajectory of the stock price has flattened. Currently, the 50-day moving average and trendline support in the $123.50 area are being tested, and the technical indications are pointing to a breakdown.
The daily chart shows the steady rise in the stock price going into the September high and then the sideways price movement over the last month. During this time, the relative strength index has being moving lower and is below its center line, reflecting the recent loss of positive momentum.
Daily moving-average convergence/divergence is overlaid on a weekly histogram of the oscillator and is crossing below its center line on both timeframes. This is an indication of a loss of positive short-term momentum and trend direction.
The two indications that suggest the move lower could be volatile are the Bollinger bandwidth indicator and the graph of the percent difference between the 50-day and 200-day moving averages. The diversion between the two key technical averages is wide; in fact, it is the widest it has been since 2013. This implies a reversion of the 50-day average back toward the 200-day average, which would mean the stock price would have to move considerably lower.
The Bollinger bandwidth reading is extremely low, reflecting the recent lack of volatility. Periods of low volatility like this are often followed by periods of high volatility and, if that is the case, a breakdown from current levels could not only be deep but also could be fast.