ATVI Stock: Watching This Significant Level of Price Resistance
2017 was a year for the record books, as the markets were on a steady climb and there was little to volatility to shakes the nerves of investors. If there is one thing I could wish for on the investing front for 2018, is that the market either matches or exceeds the performance that was seen in 2017.
I am focusing on video game company Activision Blizzard, Inc. (NASDAQ:ATVI) because I have the inclination to believe that higher ATVI stock prices are on the horizon. My inclination for higher Activision Blizzard stock prices is based on a method of investment analysis called technical analysis.
Technical analysis is based on the notion that stock trends, and therefore historical data, can be used to discern these trends and forecast what the future may bring. I have been using this method for nearly two decades for the simple reason that when it is applied correctly the results are simply outstanding.
The following Activision Blizzard stock chart illustrates the developments that I am currently watching, which will dictates what happens next with ATVI stock:
Chart courtesy of StockCharts.com
This price chart clearly shows that Activision stock is bumping up against a substantial level of price resistance that resides at $67.25. This level was first established in August, and for the next four months, all attempts to move beyond it have been thwarted.
The inability to advance beyond this level of resistance coincided with a bearish signal generated by the moving average convergence/divergence (MACD) indicator.
MACD is a trend-following momentum indicator that uses the crossing of a signal line in order to distinguish whether bullish momentum or bearish momentum is influencing the price action in a stock. Bullish momentum paves the road towards higher prices, while bearish momentum paves the road towards lower prices.
In February, a bullish MACD cross was generated, and the Activision Blizzard stock price appreciated as expected. Then, in September, a bearish MACD cross was generated, and ATVI stock has refrained from advancing ever since.
The signal lines are currently converging, and a break above the significant level of price resistance will also cause the creation of a bullish MACD cross. These coinciding indications imply that higher stock prices will follow, and I am anticipating such an outcome.
My inclination for a bullish outcome is based on the fact that predominant trend is bullish, and it increases the odds that higher prices will prevail.
The following Activision Blizzard stock chart illustrates the predominant bullish trend:
Chart courtesy of StockCharts.com
This ATVI stock chart illustrates that in 2013, Activision Blizzard stock began trending higher. This trend contains the quintessential characteristic that defines all bullish trend which is a sequence of higher highs and higher lows.
This sequence is responsible the taking the stock price from lower left to upper right. This trend is orderly, and orderly trends are stable, and stable trends are sustainable.
The price action has been so pristine that simple trend lines were crated by connecting the sequence of higher high and higher lows. These trend line defines levels of price support and price resistance, and they paint a perfect ascending channel.
I feel confident in saying as long as the ATVI stock price continues to oscillate within this ascending channel that the bullish trend is still intact and that higher price will ultimately prevail.
At this current juncture I have to believe that once the resistance at $67.25 is broken, the stock will proceed to test resistance outlined by the ascending channel. This resistance level is an upward-sloping trend line, and the longer it takes to reach this level, the higher the price objective becomes.
I am bullish on Activision Blizzard stock, and I believe that once resistance at $67.25 is overtaken that a higher ATVI stock price will prevail. Such a feat will coincide with a bullish MACD cross and will reaffirm the notion of higher stock prices.