|Figure 1: Weekly chart of Hasbro.|
|Graphic provided by: MetaStock.|
|On the weekly chart, Hasbro (HAS) advanced from Nov-02 to Nov-03 and then formed a 6-month consolidation between 23.3 and 19.38 (gray oval). The pattern looks like a large rectangle with key support at 19.38 (green line). The stock broke key support with a sharp decline that also took out the trendline extending up from Nov-02. This support break on high volume turned the long-term trend bearish (red arrows).|
|After about a 27% decline in less than two months, the stock became oversold and ripe for a bounce. A "throwback" to broken support is an obvious target for such a bounce. Broken support around 19.5 becomes resistance and the stock rallied back to around 20 in late May. Exact levels are nice in theory, but zones are more realistic. As such, exact support around 19.5 becomes a resistance zone (red rectangle).|
Figure 2: Daily chart of Hasbro.
Since reaching this resistance zone, bearish candlestick patterns have started to appear. The stock formed a shooting star on 28-May and two hanging man candlesticks immediately followed (red arrow). These were confirmed with a gap down and long black candlestick on 3-Jun. The stock managed a short recovery and then formed a bearish engulfing over the last two days (blue arrow). At the very least, these candlestick reversals solidify resistance around 20. A move below the 3-Jun low would confirm the bearish engulfing and argue for at least a test of the prior low (17.5 - gray circle).
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