This Technical Price Pattern on the AMX Stock Chart Is a Must-See

america movil stock
iStock.com/danielvfung

AMX Stock: This Wave Structure Cannot Be Dismissed

Coming to grips with this market is a really difficult task because volatility remains elevated and, as a result, the daily swings are very violent. These markets can turn on a dime, and this whipsawing trading action will persist until the volatility finally subsides. The good news is that volatility will subside—it always does—and when that happens, the markets will once again attempt to make a move toward higher prices.

Thus far, there has not been any technical damage to suggest that the current correction is anything but a correction. Therefore, I continue to look for investments that are setting up to make a move toward higher prices.

In my quest to find investments geared toward higher prices, I have come across America Movil (ADR) (NYSE:AMX) stock, and I must say that I am quite compelled by my findings. America Movil stock has been holding up extremely well while the markets have undergone some intense selling pressure. During this time frame, it has set up a very compelling technical price pattern.

This technical price pattern is highlighted on the following America Movil stock chart.

Chart courtesy of StockCharts.com

This AMX stock chart highlights a technical price pattern known as a cup-and-handle price pattern.

Cup-and-handle price patterns are created because a significant level of price resistance prevents the stock price from advancing beyond it. This level of price resistance currently resides at $19.50 on the AMX stock chart.

The inability to move beyond this level of price resistance has resulted in the creation of two distinct troughs, where the first trough is much larger than the second. These troughs are what characterize a cup-and-handle price pattern.

Currently, America Movil stock is attempting to break above this significant level of price resistance. Once this is feat is accomplished, higher stock prices should follow because the AMX stock price will be free to appreciate.

Cup-and-handle price patterns are continuation patterns, and the pattern painted on the AMX stock chart will be continuing the bullish trend that preceded it, which is highlighted on the following America Movil stock chart.

Chart courtesy of StockCharts.com

This AMX stock chart illustrates a bullish trend, which is characterized by a sequence consisting of higher highs and higher lows.

This bullish trend began its development shortly after a golden cross was generated in January 2017, when the faster 50-day moving average crossed above the slower 200-day moving average. A golden cross indicates that a bull market is in development, and as long as the moving averages that created this signal remain in bullish alignment, I will not refute this notion.

I used an uptrend line to capture this bullish trend and I created it by connecting the sequence of higher lows.

The uptrend line is a level of price support that acts like a dividing line that separates this investment’s current bullish trend from a potential bearish one. It is not a coincidence that the uptrend line coincides with the 200-day moving average, because this moving average acts much in the same way as the uptrend line. As long as AMX stock is trading above both these metrics, the bullish trend is intact and higher prices are likely to prevail.

The cup-and-handle price pattern, when completed, will reinforce the notion that this bullish trend is still in development.

The next chart is why I am really excited about the prospects of America Movil stock. An extremely large wave structure has been in development since 2002, and the notion higher AMX stock prices can set the wheels in motion where an epic move can develop.

This extremely large wave structure is highlighted on the following America Movil stock chart.

Chart courtesy of StockCharts.com

The large wave structure highlighted on the AMX stock chart consists of an impulse wave and a consolidation wave.

The impulse wave (highlighted in green) outlines the stage in a bullish trend when a stock makes a sustained move toward higher prices.

The consolidation waves (highlighted in purple) outline the stage in a bullish trend when a stock corrects and refrains from advancing. The corrective price action that characterizes a consolidation wave is necessary in order to unwind any overbought conditions that were created during the impulse wave, which sets the stage so a new advancing impulse wave can develop.

AMX stock has created very large waves, and America Movil stock has been within the confines of a consolidation wave since 2008. Once this consolidation wave is complete, a very large impulse wave is expected to follow, which will last for years.

The moving average convergence/divergence (MACD) indicator has recently swung into bullish alignment, and it is supporting the notion that the consolidation wave is approaching completion.

MACD is an influential momentum indicator that uses the crossing of signal lines to determine whether bullish or bearish momentum is influencing the price action in a stock. This indicator is influential because a stock cannot sustain a move in either direction unless the applicable momentum is supporting it.

The entire time the consolidation wave was in development, the MACD indicator was in bearish alignment, and true to its nature, the stock price refrained from advancing. In the fourth quarter last year, a bullish MACD signal was generated, implying that America Movil stock is now able to sustain a move toward higher stock prices, which considerably increases the odds that an impulse wave will manifest in the not-too-distant future.

Analyst Take

America Movil stock is on its way to completing a very large corrective consolidation wave, implying that a very large advancing impulse wave is setting up to follow. A number of indications on the AMX stock chart are currently in bullish alignment, which supports the notion of higher stock prices, which increases the likelihood that this anticipated impulse wave will manifest.