DRYS Stock: Another Epic Move Toward Higher prices?
DryShips Inc. (NASDAQ:DRYS) stock is an investment that everybody loves to hate, and for good reason. This investment has been a case of much distress for any investor who decided that DRYS stock was ever a good long-term investment.
DryShips stock has lost 99% of its value, so it’s safe to say that these investors have likely lost considerable sums of money.
So why would I focus on a company with such a dubious past? The answer is quite simple: I have reason to believe that there is a possibility that a move toward higher prices is in development. These beliefs are centered around the DryShips stock chart, using a method of investment analysis called technical analysis.
Technical analysis is based on the notion that historical data can be used to forecast what the future may hold. I have been using this method for roughly two decades, and it was the basis that correctly suggested that the epic move in DRYS stock that occurred last year, in November, had further to run. The details about that can be found by clicking HERE.
The following DryShips stock chart illustrates the indications that are currently suggesting that a potential move is on the horizon.
Chart courtesy of StockCharts.com
The pattern highlighted on the DRYS stock chart is a triangle pattern, and this pattern is why I believe that DryShips stock is setting up to make a move.
Triangle patterns develop when the stock’s price is characterized by a series of lower highs and higher lows. These patterns can easily be defined by using two converging trend lines. These trend lines are created by connecting the series of lower highs and higher lows that characterized this pattern. These trend lines define levels of price support and price resistance within the pattern.
Triangles are among my favorite patterns because they are very special patterns that produce powerful breakouts. The power resulting from these patterns develops because the convergence between support and resistance causes energy to build within the pattern. This stored energy is released when the stock price musters enough strength to either break above resistance or fall through support.
The triangle is currently wound tight, with support and resistance being tested on numerous occasions. At the moment, support resides at $3.70 while resistance resides at $4.50. I have the inclination to believe that this pattern will resolve itself in a bullish manner by breaking above resistance, suggesting that higher DRYS stock prices will follow.
Inclinations are never a good reason to enter any trade, however, let alone DryShips stock. Therefore, it is always wise to wait for a confirming indicator.
If a bullish event is set to occur, it will involve the moving average convergence/divergence (MACD) indicator. This indicator is highlighted in the lower panel of the DryShips stock chart, and it is used to distinguish whether bullish or bearish momentum is influencing the price action in a stock. This distinction is made using the crossing of a signal line.
This indicator is very important and influential because a move toward higher prices cannot sustain itself without bullish momentum driving the share price higher.
The MACD signal line is currently above the zero line and now, for the first time since last year, it is converging, which suggests that a bullish signal is a real possibility. A bullish MACD cross will likely coincide with a break above resistance. These coinciding indications would suggest and confirm that a move toward higher prices is in development.
Shipping stocks have a tendency to move by leaps and bounds, and the potential move toward higher prices could be something of epic proportions. I am eager to see how DRYS stock plays out.
I believe that the DryShips stock chart is all set up to make a move, and the indicators I have outlined will act to suggest and confirm that such an event in DRYS stock is occurring.