FEYE Stock Is in Bullish Alignment
FireEye Inc (NASDAQ:FEYE) stock isn’t known for its wealth-generating characteristics, and this is due to the poor performance that FEYE stock has experienced over the years. A vicious bear market has punished investors over the years, but I am here to present some good news. The FireEye stock chart is becoming quite constructive, and it is currently setting up to make a move to the upside.
Before I move forward and outline the key developments that are suggesting that an advance is potentially setting to take hold, it’s worth pointing out that the method I employ to generate a view on a potential investment is technical analysis.
This method is predicated on historical price and volume data points. These data points are used to define the predominant trend, which then can be used to forecast future stock prices. I have been using this method of analysis for nearly two decades, and I have become quite proficient at it.
The following FireEye stock chart illustrates the indications that are suggesting that a move to the upside is in the making.
Chart courtesy of StockCharts.com
The FEYE stock chart above illustrates that the bearish trend towards lower prices has finally begun to ease, and that FEYE is up 22.6% on the year, which is a change for the better.
A number of indicators that confirmed the notion of lower prices have just reversed. They are now in bullish alignment, suggesting that bullish tailwinds are swirling around FireEye shares, which increases the possibility of higher prices.
In September 2015, the faster 50-day moving average crossed below the slower 200-day moving average, generating a death cross. That pattern is a bearish indication, which should be obvious from its name. This indication is used by the investment community to identify that a bear market is in development, and that a lower stock price can be expected to follow.
FEYE stock proceeded to drop from a price of $32.00 to $10.35 while this indicator was engaged, suggesting it is wise to pay close attention to this indicator.
In May, the death cross finally gave way to a golden cross, implying that the bear market had finally concluded for this stock, and that a bull market is now in development. A bullish cross simply suggests that an advancing move can be expected to follow.
It is worthwhile noting that the bullish cross was generated after FEYE shares were finally able to break above the 200-day moving average, which is highlighted in red on the chart above.
The stock has not traded above this level since it fell below it in August 2015. The 200-day moving average acts as the dividing line that separates bullish investments from bearish ones and, as a result, it is always wise to pay attention to which side of the moving average the shares are trading on. Trading below the 200-day moving average is bearish, while trading above it is bullish. This marks the second straight month that FireEye shares are trading above this dividing line.
The performance year-to-date has been positive, and the price action continues to suggest that higher prices are likely to continue. The following FireEye stock will help illustrate this notion.
Chart courtesy of StockCharts.com
This FEYE stock chart illustrates that the price action off the lows set this year have been quite constructive. Constructive price action consists of an alternating wave structure containing impulse waves and consolidation waves.
The impulse waves are highlighted in green, and they define the progression of the stock price as it stages an advance.
The consolidation waves, highlighted in purple on the above chart, define the counter-trend move in the stock price that is required in order to alleviate overbought conditions so that a new advancing impulse wave can develop.
This alternating wave structure is a necessary staple that is required when a lasting trend is being established. This wave structure maintains an orderly trend that is sustainable.
FEYE stock is currently in the midst of developing a consolidation wave, and the completion of this wave will indicate that another impulse wave is set to develop. This wave pattern would be on pace to creating a new 52-week high. It would also tack on the gains that have already been created in this impressively bullish year for FireEye stock.
Bottom Line on FireEye Inc
I am bullish on FireEye stock, expecting further gains to follow. This bullish view was produced by using indications that were generated on the FEYE stock chart. These indications remain in bullish alignment, which supports the notion that higher stock prices are expected to follow.