Destination XL Group (DXLG) Close To A Break?

Destination XL Group, Inc. engages in the retail of specialty products. It offers shirts, pants, shorts, outerwear, activewear, suiting, underwear and lounge, shoes, and accessories. It distributes its products under the following brand names: Destination X, DXL, DXL Men’s Apparel, DXL Outlets, Casual Male XL, and Casual Male XL Outlets.

Take a look at the 1-year chart of Destination (NASDAQ: DXLG) below with the added notations…

Chart of DXLG provided by TradingView

DXLG has formed key resistance at around $5.50 (red) over the past several weeks. In addition, the stock is also rising on top of an up-trending support line (blue). These two lines have DXLG trading within a common pattern known as an ascending triangle. Eventually, the stock will break out of it.

The Tale of the Tape: DXLG has formed a triangle pattern. A short trade could be made on a break of support or on a test of resistance. A long trade could be made at support or on a break through the triangle resistance. 

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!

Christian Tharp, CMT

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