These Embedded Price Patterns Support Further Gains in FOXA Stock

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iStock.com/Kristina Kokhanova

FOXA Stock: Primed for Further Gains

We live in crazy times. The President of the United States shook hands with the Supreme Leader of North Korea, which was just a few days after he called the Prime Minister of Canada (who I had assumed was our closest ally) “dishonest and weak.” Unprecedented times indeed.

Brushing this news aside, the markets continue to appreciate, and there is nothing to suggest that higher values cannot continue to prevail.

I am focusing on Twenty-First Century Fox Inc (NASDAQ:FOXA) stock because when I cycled through the charts on different time frames, I noticed something quite exciting. There are a number of embedded price patterns on the FOXA stock chart suggesting that Twenty-First Century Fox stock is likely to sustain a move toward much higher prices.

The first pattern suggesting that higher prices are on the horizon is captured  on the following Twenty-First Century Fox stock chart.

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Chart courtesy of StockCharts.com

The completed technical price pattern highlighted on the FOXA stock chart is a symmetrical triangle pattern. Symmetrical triangles develop when the price action is characterized by a sequence of lower highs and higher lows.

Capturing this sequence is accomplished by connecting the peaks and troughs that were created by the higher lows and lower highs. This process produces two converging trend lines that create a symmetrical triangle.

These trend lines are very important because they define where significant levels of price support and price resistance reside. Only when one of these levels are breached is the pattern finally resolved.

The converging nature of these trend lines is why triangle patterns cannot continue forever. It is also responsible for creating such powerful breakouts.

The power generated from a completed triangle is fueled by traders positioning themselves on either side of support and resistance in anticipation of a possible breakout.

The longer it takes to complete the pattern, the more energy is built up inside it. This stored energy is finally released when the stock price either breaks above resistance or falls below support, and a powerful move usually follows.

On May 7, FOXA stock broke out above resistance, completing the symmetrical triangle. True to its nature, higher prices have since prevailed.

This symmetrical triangle is a piece of a much larger wave structure, which augurs for further gains. This wave structure is captured on the following Twenty-First Century Fox stock chart.

Chart courtesy of StockCharts.com

This FOXA stock chart illustrates the wave structure that the symmetrical triangle is an integral part of.

The wave structure consists of impulse waves and consolidation waves.

Impulse waves are advancing in nature. Therefore, they define the period in a bullish trend when a stock makes a sustained move toward higher prices.

Consolidation waves are corrective in nature. Therefore, they define the period in a bullish trend when a stock corrects and refrains from advancing.

Impulse waves lead and consolidation waves follow. These work together, feeding off each other, in order to create and sustain a bullish trend.

The symmetrical triangle doubles as a consolidation wave, and its completion implies that a new advancing impulse wave is now in development.

The impulse wave that preceded the consolidation wave was large in magnitude and, since these impulse waves tend to mirror each other, a large impulse wave is now expected to follow.

This wave structure is actually embedded within a much larger price pattern, and it too is supporting the notion that a large move in FOXA stock is on the horizon.

This much larger price pattern is captured on the following Twenty-First Century Fox stock chart.

Chart courtesy of StockCharts.com

This FOXA stock chart highlights a cup and handle price pattern, which the wave structure is a part of.

Cup and handle price patterns are created because a significant level of price resistance prevents the stock price from advancing beyond it.

The stock’s inability to move beyond this price point results in the creation of two very large and distinct troughs. In the creation of a cup and handle pattern, the first trough is always much bigger than the second. It is these troughs that characterize the cup and handle price pattern.

On June 7, Twenty-First Century Fox stock broke above resistance, completing the cup and handle pattern. This completed price pattern reinforces the implications of the patterns and waves that preceded it, suggesting that much higher Twenty-First Century Fox stock prices are on the horizon.

Analyst Take

I believe that much higher Twenty-First Century Fox stock prices are on the horizon. These bullish beliefs are based on a number of embedded technical indications that are both suggesting and reinforcing that FOXA stock is primed for such an outcome.