WFM (Whole Foods Market Inc) is too overbought for my comfort level after a very extended, near-vertical rally from the bottom of this 1.5+ year basing pattern to the top of the trading range. As such, my preference for a long entry will either be a breakout above the top of the base IF the stock consolidates here for a while -OR- possibly on a backtest of the pattern from above, if WFM breaks out soon, ideally after a period of consolidation to alleviate the overbought conditions. Daily & weekly charts below.
As I often say, overbought can become much more overbought so it is certainly possible that WFM goes on to break out above the top of this large basing pattern soon & goes on to rally from there. We all have our own trading rules & one of my is not to take long-side breakouts that come on the heels of a very overbought, extended rally as more often than not, those breakouts either fail (prices falling back down into the pattern & moving lower) or go on to backtest & consolidate shortly after the breakout for what is often an extended period of time. As such, this one is on watch as a potential official trade idea but until & unless that happens, I just wanted to pass along this setup for those that might be interested.