BlackBerry Ltd.: BBRY Stock is on the Verge of Something Huge
BBRY Stock: The Fuse is Lit
BlackBerry Ltd.(NASDAQ:BBRY) stock may not be the best-run company, and I am not sure why it still has such a large base of followers, but I know why I am watching BBRY stock. I am completely enamored with this company’s stock chart. Something is brewing beneath the headlines and this has resulted in a constructive stock chart. I am currently watching BlackBerry stock like a hawk, The pattern has been many years in the making and I am expecting a major move to develop when the pattern finally breaks free.
I am a firm believer of matching fundamental analysis and technical analysis to come to one conclusion with regards to an investment. I do not weigh each analysis equally; I actually put more credence into the stock chart than into fundamentals. The reason for this disparity is that financial statements are backwards-looking data, and not time-sensitive. I also believe that there are many people much smarter than I am. These savvy individuals have done their due diligence with regards to the value of this investment, and their money being put to work reflects the value and effects the trend.
The following chart illustrated the pattern in BBRY stock that has piqued my interest.
Chart courtesy of StockCharts.com
BBRY stock has spent the last four years creating a descending triangle. Descending triangle patterns often have five points of contact before the pattern breaks in either an upward or downward direction. On average, a breakout usually occurs when the pattern has completed 70% of the triangle, and BBRY stock has fulfilled these objectives. A breakout is imminent and I am eagerly awaiting that outcome.
These patterns are especially powerful when resulting from the confinement of the price within the pattern. The price bounces from each respective resistance level and builds momentum each time that it is rejected by the trend line. The longer it takes for such patterns to play out, the larger the reaction when the pattern is finally complete.
On average, triangles mark continuation patterns, but it is not uncommon for triangles to appear at the end of a trend. These patterns are known as “ending triangles” and are significant trend reversal indicators.
The following chart illustrates other positive developments in BlackBerry stock:
Chart courtesy of StockCharts.com
On September 12, 2016, Blackberry stock generated a golden cross, a bullish signal that is produced when a 50-day moving average (highlighted in blue) crosses above a 200-day moving average (highlighted in red). Traders use this signal to confirm a bull market is on the horizon. History has proven that trading against this signal is never wise.
BBRY stock would need to continue to trade above both moving averages in order to avoid averting this bullish signal. The current short-term trend within the triangle is illustrated on the intraday chart of BlackBerry stock chart using a one-hour scale.
Chart courtesy of StockCharts.com
The downtrend line (highlighted in blue) is created by connecting the peaks on a price chart. A downtrend, defined by lower lows and confirmed by lower highs, can easily be identified as the price moves from the upper left to the lower right. This is a clear example of a bearish price action, and shares will continue to trade with a bearish bias for as long as this trend remains intact.
In order for this trend to reverse, the downtrend line needs to be broken. This price action will also coincide with a higher high as the level of resistance (highlighted in green) will also be broken to the upside. This event would open the door for another attempt at a bullish breakout of the descending triangle.
Bottom Line
BBRY stock continues to trade within the large descending triangle. The convergence of the moving averages serves to sway my bias bullish, as a possible breakout in the upward direction is not only plausible, but possible. I am watching BlackBerry Stock carefully while awaiting an outcome.
