Watch These Dollar Tree Stock Price Levels After CEO Steps Down

Dollar Tree (DLTR) shares moved higher ahead of Tuesday’s opening bell after the discount retailer reiterated its fiscal third-quarter outlook and said its chief executive officer was stepping down.

The retailer said it had appointed chief operating officer Michael Creedon as its interim CEO to replace Rick Dreiling, who said he was standing down due to health challenges. The company also said it had made progress on its strategic review of Family Dollar, a general merchandise segment that has weighed on the retailer’s sales in recent years. 

The company sees net sales coming in between $7.4 billion and $7.6 billion, while expecting adjusted earnings per share (EPS) to range from $1.05 to $1.15, thanks to same-store sales tracking well throughout the quarter, even as price-conscious consumers continue to spend cautiously.

Dollar Tree shares have lost more than half their value since the start of the year though Monday’s close, with challenging macro conditions promoting the retailer in September to slash its full-year outlook. Shares were up 4% at $69.50 in premarket trading Tuesday.

Below, we take a look at Dollar Tree’s chart and apply technical analysis to identify important price levels worth watching out for.

Potential Double Bottom

Since reaching their early-September low, Dollar Tree shares have formed two distinct troughs around the same level on the chart, raising the possibility of a double bottom, a classic pattern that signals a potential upside trend reversal.

More recently, the stock has staged a bounce from lows but ran into selling pressure just beneath the respected 50-day moving average, indicating caution amid ongoing uncertainties.

However, as the stock looks set to test higher prices on Tuesday, let’s identify several key resistance levels on Dollar Tree’s chart and point out a major area of support to monitor if buying momentum subsides.

Key Resistance Levels to Monitor

Firstly, it’s worth eyeing the $77 level, a location on the chart where investors who purchased the stock near recent lows may look to lock in profits near the September swing high.

A volume-backed breakout above this level would confirm a double bottom on the chart and potentially act as a catalyst for a move up to $92, an area where the shares may encounter resistance near the mid-August trough.

Follow-through buying could see the shares test the $104 level. This region may attract selling pressure near a trendline connecting a range of comparable trading levels on the chart between September last year and August this year.

Major Support Area to Watch

If news-related buying subsides, it’s worth monitoring how the shares respond to the $63 area, a location where investors may look for buying opportunities near the two potential double bottom troughs that formed between early September and late October. However, a breakdown below this level could see the stock continue its longer-term downtrend.

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As of the date this article was written, the author does not own any of the above securities.