EA Stock: Trader’s Paradise
When it comes to gaming, I like Electronic Arts Inc. (NASDAQ:EA). This fondness is especially true with its gaming titles. When it comes to investing, I love EA stock because the price chart is so compelling that it is the only reason I need to commit to a trading strategy. This Electronic Arts stock chart is now suggesting that price and volume are set to spike.
Electronic Arts stock contains one of my favorite bullish trends. This simple trend is the only tool I need to use in order to distinguish if EA stock is bullish or bearish. This trend is so pristine and defined that stock is a strong candidate to join the rank of names in the “Trader’s Paradise.”
Stock that fall in this category have a strong adherence to rules set out by technical analysis. Technical analysis is a method of analyzing investments using past volume and price data. This data is used to discern trends and forecast future prices. Adherence to these rules increases the efficacy of any investment strategy that is based on technical analysis.
The following Electronic Arts stock chart illustrates this pristine and defined trend.
Chart courtesy of StockCharts.com
The stock chart above illustrates an uptrend that has made EA stock a candidate to join the “Trader’s Paradise.” This exquisite uptrend line has supported the price of EA stock since 2014. This trend line defines the bullish trend that consists of higher highs and higher lows and can be easily identified because it moves from the lower left to the upper right of the price chart.
This simple trend line is one of my favorites because it serves to manage a trading strategy with ease. The uptrend line defines the risk in this investment at any given point in time. As long as Electronic Arts stock is trading above this uptrend line, the bullish trend towards higher prices is set to continue. Closing below this trend would suggest that the bullish trend has terminated, and that a new bearish trend towards lower prices is set to begin.
There are developments that are suggesting that EA stock is going to experience a spike in both price and volume, leading to increased volatility. The following Electronic Arts stock chart illustrates these developments.
Chart courtesy of StockCharts.com
The EA stock chart above illustrates the circumstances that have developed that suggest a violent reaction can be expected. There are currently two trend lines that are converging. These trend lines represent walls of price containment that are closing in on Electronic Arts stock, with time and space running sparse.
The first trend line is the same uptrend that has been supporting price since 2014, and the second trend line represents resistance that has contained price from advancing since the peak in price was created in early October.
One of these trend lines is going to break in the near future, and if I had to guess, I would go with resistance, because support outlined by the uptrend line has stood the test of time and the bullish signal generated in May remains intact and supports this notion.
The indicator that I am referring to is the golden cross that was generated in May 2016. A golden cross is a bullish signal that is produced when the faster 50-day moving average (highlighted in blue) crosses above the slower 200-day moving average (highlighted in red). This indicator suggests that the bulls are still in control, and as long as EA stock is trading above both moving averages, it increases the probability that support outlined by the uptrend line will hold, and resistance (highlighted in purple) will be broken.
When two trend lines begin to converge as these two are, many traders identify this phenomenon and start anticipating a resolution. There are many different ways to set a trading strategy that involves a resolution to these converging trend lines. One thing I can speculate on is that there are many orders now sitting on each side of these trend lines set to trigger once price hits them.
When a trend line finally breaks. a flurry of orders will be filled and anyone caught on the wrong side will have to unwind their position as quickly as possible. Events such as these create spikes in both price and volume as a resolution is finally met.
Bottom Line on EA Stock
The “Trader’s Paradise” candidate, Electronic Arts stock is now trading within the confines of two distinct trend lines. Time and space is running out, and EA stock will be breaking through one of these trend lines at any moment. This break will bring about a spike in both price and volume, indicating volatility is set to increase.