MDRX Stock: A Massive Pattern Implies a Massive Move
I am sure we all understand that the current market environment is nothing like the market environment that investors were graced with all of last year.
Investing in 2017 was a pleasant experience that felt like a walk in the park on a nice sunny day. Investing in 2018 has not been so pleasant, feeling more like a roller-coaster ride on a wet and windy day.
There is good news, however, because the elevated levels of volatility that were responsible for creating the unpleasant conditions have begun to dissipate, opening the door for the markets to regain their footing and build on the bull market that began in 2009.
Speaking of bull markets, the Russell 2000 has just gone on to forge a new all-time high in this unpleasant trading environment. The Russell 2000 is a small-cap index.
If this group of stocks is charging ahead, this bodes extremely well for the markets going forward. It suggests that the path of least resistance is still geared toward higher prices, reinforcing the notion that a bull market is still in development.
Staying with the theme of small-cap stocks, because this group is obviously leading the market, I have decided to focus on Allscripts Healthcare Solutions Inc (NASDAQ:MDRX).
The reason why I am focusing on Allscripts stock is that there is an absolutely massive price pattern in development. Once this pattern is completed, a huge move in MDRX stock is expected to follow.
This massive technical price pattern is highlighted on the following stock chart.
Chart courtesy of StockCharts.com
The absolutely massive technical price pattern highlighted on this MDRX stock chart is a symmetrical triangle.
A symmetrical triangle is created when the price action is characterized by a sequence of lower highs and higher lows.
I captured this pattern by connecting the peaks and troughs that were created by the sequence of higher lows and lower highs, using two converging trend lines.
These trend lines not only capture the pattern, but they also define where significant levels of price support and price resistance currently reside.
This is, of course, pertinent information because this pattern will only be resolved once the Allscripts stock price exits the pattern.
Triangle price patterns are very special. The confinement of space created by the converging trend lines causes energy to build within the pattern. This energy is created by traders positioning themselves on either side of support and resistance in anticipation of a break above resistance or a break below support.
The stored energy causes the pattern to act like a coiled spring, awaiting that fateful day when the pattern is completed and the energy is released.
The size and scope of the move that follows is directly related to the size of the pattern. As I said earlier, this symmetrical triangle is massive in size. It has been in development for 12 years, suggesting that an equally massive move in MDRX stock is expected once that pattern is resolved.
In order to get a better understanding of the scope of this pattern, it is always wise to investigate the price action that preceded it.
The combination of the symmetrical triangle and price action that preceded it are highlighted on the following Allscripts stock chart.
Chart courtesy of StockCharts.com
This Allscripts stock chart illustrates that, prior to the development of the triangle, MDRX staged a progressive move toward higher stock prices.
This progressive move toward higher prices has been labeled as an impulse wave. By definition, this wave captures the stage in a trend when a stock makes a sustained move toward higher prices.
The symmetrical triangle has been labeled as a consolidation wave. By definition, this wave captures the stage in a trend when the stock price corrects and refrains from advancing.
These waves work together in order to create and sustain a trend. The impulse wave that preceded the consolidation wave was advancing in nature, suggesting that this wave structure is creating and sustaining a bullish trend.
This bullish trend created by this wave structure increases the odds that the symmetrical triangle will resolve itself in a bullish manner and that the massive move expected to follow will be toward higher MDRX stock prices.
Once this event occurs, I will provide an update and outline the price objectives for Allscripts stock suggested by this wave structure.
A massive technical price pattern has been in development on the Allscripts stock chart. Once this pattern is resolved, a very big move in MDRX stock is expected to follow.