AAXN Stock Chart Suggests That $68.00 Is a Viable Price Objective
The markets are currently testing every important and influential level of price support, but whether these levels hold is something that will have to be seen.
There is one aspect of this market that I am confident in proclaiming, and it’s that the wild swings that have characterized 2018 are very likely to continue. Until the investment community comes to grips with the notion of higher interest rates and the prospects of a trade war, volatility will remain elevated.
These volatile markets can be a reason for discouragement, so, in order to combat this, I am making my motto for 2018: “There is a bull market in development somewhere.” As a result, I will continue to search high and low for investments that contain certain characteristics that imply that they are geared toward a bullish outcome.
I am excited to be focusing on Axon Enterprise Inc (NASDAQ:AAXN) because I believe that Axon Enterprise stock is one of the lucky investments that is currently geared toward higher stock prices.
My beliefs are centered around the price action and technical price patterns that have been created on the AAXN stock chart.
The first thing that caught my eye when I was looking at the Axon Enterprise stock chart was that the price action was constructive, which is characteristic of a stock that is in a bullish trend.
The constructive price action is highlighted on the following chart.
Chart courtesy of StockCharts.com
This AAXN stock chart has been annotated to highlight the constructive price action that has been responsible for creating a bullish trend in Axon Enterprise stock.
Constructive price action consists of impulse waves and consolidation waves, which is the foundation responsible for sustaining a bullish trend.
The waves highlighted in green are impulse waves, and these waves are advancing in nature. They capture the stage in a bullish trend when a stock makes a sustained move toward higher prices.
The wave highlighted in purple is a consolidation wave, and these waves are corrective in nature. These waves capture the stage in a bullish trend when a stock corrects and refrains from advancing.
Corrective price action is very important in the development of a bullish trend because it creates the necessary conditions for an impulse wave to follow.
The AAXN stock chart illustrates that, in December 2017, the stock completed the consolidation wave by exiting the pattern in an upward direction. As a result, an impulse wave has been in development ever since, and new all-time highs have followed.
This constructive price action was just a piece of a much larger technical price pattern, which is captured on the following Axon Enterprise stock chart.
Chart courtesy of StockCharts.com
This AAXN stock chart illustrates that, since 2004, a technical price pattern known as a cup and handle pattern has been in development.
Cup and handle price patterns are created because a significant level of price resistance prevents the stock price from advancing beyond it.
This inability to break above resistance causes the price action to create two distinct troughs, with the first trough being much larger than the second. These troughs create a picture that resembles a teacup, and it is why the pattern is called what it is.
The significant level of price resistance highlighted on the Axon Enterprise stock chart resides at $36.00, and it was first established in December 2004. This means the pattern has been in development for 13 years, making it a very large technical price pattern.
The size of the pattern is very significant because the reaction that is expected to occur once the pattern is resolved is directly related to the size of the pattern; large patterns should have equally large reactions.
On March 1, 2018, AAXN stock broke above resistance, completing the cup and handle price pattern, implying that much higher prices are on the horizon.
I can justify a potential price objective of $68.00 because this is the objective suggested by the completed cup and handle price pattern.
In case anyone is wondering, this price objective was obtained by taking the depth of the cup and extrapolating that value above the significant level of price resistance that defined the pattern.
The completion of a very large technical price pattern on the Axon Enterprise stock chart implies that much higher prices are on the horizon.
At this current juncture, I will maintain a bullish view on AAXN stock as long as it remains above the significant level of price resistance, which resides at $36.00.