BBRY Stock: A Resolution Is Close at Hand
I have been watching BlackBerry Ltd (NASDAQ:BBRY) stock for what now feels like an eternity. It sits there on my watchlist, and it actively trades as participants buy and sell shares, but nothing really seems to change.
BBRY stock is up 1.6% on the year, which is weak, relative to its counterparts that have participated in the broad market rally that has pushed share prices higher on a global scale.
I am approaching my wits’ end with this potential investment, but I am also aware that, when frustrations begin to peak, something out of the ordinary may be just around the corner. I have been waiting for a technical pattern that has been in development for nearly five years to resolve itself. The resolution to this technical price pattern will dictate the next decisive direction that BlackBerry shares will take, and I believe such a resolution is approaching quickly.
For anyone not familiar with my writing, my views on potential investments are generated using technical analysis. This method of investment analysis is based on the notion that historical price and volume data can be used to discern a trend and forecast future stock prices. I have been refining my craft in this method for nearly two decades, and I have become quite proficient and successful at generating accurate views by using a stock chart.
The following BlackBerry stock chart illustrates the technical price pattern that has been in development for over four years.
Chart courtesy of StockCharts.com
The BBRY price chart above illustrates a symmetrical triangle pattern that has been in development since early 2013.
A symmetrical triangle contains two converging trend lines; the upper trend line represents resistance and the lower trend line represents support. As the pattern progresses, these converging trend lines cause the swings in the price of BlackBerry shares to contract, as the range between support and resistance continue to shrink.
This convergence of time and space causes momentum to build within the pattern. This momentum will finally be released when the pattern is compete and the share price exits the triangle.
Triangle patterns are powerful, and this is based on the amount of momentum that is stored with those patterns. Larger patterns over long time frames are expected to produce long and large reactions. When BBRY stock finally exits this pattern, a sharp move in the price is expected, and this is why I continue to keep a close eye on this investment.
I can’t say for certain which way BlackBerry shares will break out of this symmetrical triangle pattern, but I do look for clues within the symmetrical triangle that can help shed some light on whether support or resistance is going to be tested next.
The following BlackBerry stock chart illustrates the price action that can be used to shed some light on the next direction that the share price will take within the technical price pattern.
Chart courtesy of StockCharts.com
The price action of the March lows at $6.65 have been very constructive. Constructive price action consists of a two-wave pattern, in which the first wave is an impulse wave and the second wave is a consolidation wave.
The impulse wave, which is highlighted in green in the above chart, serves to advance the price. The consolidation wave, which is highlighted in purple, serves to alleviate any overbought conditions and set up the next impulse wave. This alternating wave structure is the foundation of a sustainable trend.
The current consolidation wave has taken the form of a symmetrical triangle. Once again, like its predecessor on the chart above, this pattern is nearing completion, and a resolution to this pattern will determine whether support or resistance outlined by the larger symmetrical triangle will be tested.
This wave structure is useful in many respects. Not only is it useful in indicating the next direction thew price will take, but it is also instrumental in providing a price objective when the price exits the pattern. The theory behind this wave structure is that impulse waves separated by a consolidation wave tend to mirror each other in terms of magnitude. As a result, when the pattern is completed, a move similar to the impulse waves that preceded the consolidation wave is expected.
Applying this theory to the price action above suggests that a bullish breakout would target the $7.50 price level, while a bearish breakout would target $6.70. Both price objectives are in line with either the resistance or support outlined by the symmetrical triangle, and this serves to suggest that the pattern will be tested again in the not-too-distant future.
Bottom Line on BlackBerry
I am awaiting a resolution of the technical price pattern—which has been in development for over four years—in order to generate a bullish or bearish view on BlackBerry stock.
Once this pattern is resolved, I am expecting an explosive move in BBRY stock. This explosive move is based on this particular technical price pattern which suggests that quite a bit of momentum is being stored within the pattern, waiting to be released.