DDD Stock: A Bull Is Born
The technical price pattern on the 3D Systems Corporation (NYSE:DDD) stock chart has been the focus of numerous publications. I have been waiting for the completion of this price pattern for quite some time, and I am happy to share that DDD stock has finally done so. Patience is a virtue, and I am now expecting some serious fireworks in 3D Systems stock to follow.
This price pattern was the final piece of the puzzle I was seeking to be able to say that the bear market that pillaged over 90% of 3D Systems stock’s market value has come to a conclusion. This conclusion to the bear market also means that a new bull market has just been born. This carries a tremendous amount of implications, and most importantly, higher stock prices are now expected to follow.
These indications that I am referring to are all within the body of knowledge known as technical analysis. This is my preferred method of choice when it comes to analyzing a potential investment. Just to make it clear, I have a background in fundamental analysis but, in order to create investment strategies, I require timely information that only technical analysis can provide.
The following 3D Systems stock chart illustrates the final piece of the puzzle, the completed technical price pattern.
Chart courtesy of StockCharts.com
The price chart above illustrates that a consolidation wave has just been completed. This wave is part of a wave structure that is essential in creating a sustainable trend.
I have found that sustainable trends carry a certain characteristic that I have dubbed “constructive price action.” Constructive price action consists of an alternating wave structure. This structure contains two distinct waves: an impulse wave and a consolidation wave.
The initial wave where the trend begins is the impulse wave. This is a wave of price progression, which can be in the form of an advance or a decline. A consolidation wave follows an impulse wave, and the function of this wave is to unwind any extreme conditions that were created during the impulse wave.
I focus quite a bit of my attention on seeking out price charts that contain a certain kind of consolidation wave. The consolidation wave that was just completed is in the form of a triangle price pattern. These price patterns are very special, and quite powerful as a result. The breakout that just occurred happened in dramatic fashion where DDD stock closed higher by 11.69%. This exceptional level of performance is a testament to the power of this price pattern.
The power within this pattern is created because it contains a series of lower highs, and higher lows. This characteristic is best illustrated using two converging trend lines, as shown in the stock chart above, which help capture this triangle price pattern.
As this pattern develops, the distance between the two trend lines that are acting as levels of price support and resistance begins to contract considerably. This causes momentum to build within the price pattern that will eventually be released when support or resistance is breached.
This price pattern was resolved in an upward direction, suggesting that an impulse wave is now set to develop. This new prospective impulse wave will confirm the indication suggested by the golden cross that a bull market is in development.
A golden cross is an indicator that is generated when the faster 50-day moving average crosses above the slower 200-day moving average. This indicator is popular in the trading community because it helps quantify when the price trend is accelerating by illustrating that the average price over the last 50 days is trending above the average price for the last 200 days.
The completion of the consolidation wave also serves to confirm the bullish view that was generated by the following indicator on the 3D Systems stock chart.
Chart courtesy of StockCharts.com
Aside from the golden cross, the moving average convergence/divergence (MACD) indicator was also suggesting that a bullish trend was in development. This momentum indicator uses signal-line crossings to generate a bullish or bearish signal, and it is quite effective in confirming that the predominant trend that is in development.
For instance, in April 2014, a bearish cross was generated, indicating that bearish momentum was governing DDD stock. This created a headwind where the path of least resistance was geared towards lower stock prices. This indicator didn’t get anyone out at the top, but was effective in suggesting that much lower stock prices were likely to follow.
In April 2016, a bullish cross was generated, indicating that bullish headwinds were now governing DDD stock. This created the dynamic where the path of least resistance was geared towards higher stock prices.
The missing piece, the completed consolidation wave, has now given me all the required indications to confirm that the bear market in 3D Systems stock has finally concluded, and a new bull market has been born.
Bottom Line on 3D Systems Stock
I have all the indications I need to believe that 3D Systems stock is now in a bull market and higher DDD stock prices are likely to follow.