BlackBerry Stock Is Testing a Very Important Price Point

blackberry stock
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BBRY Stock: Testing the 200-Day Moving Average

The time has come to post an update on BlackBerry Ltd (NASDAQ:BBRY) stock, because just like the title is suggesting, BlackBerry stock is currently testing a very important price point. How BBRY stock reacts as this price point is tested will determine whether higher or lower stock prices are set to prevail.

For those who have not frequented my works, it is noteworthy to point out before I move forward that my views on BlackBerry stock have been generated by analyzing the BBRY stock chart. This method of analysis is known as technical analysis and it is based on using historical price and volume data to speculate on what the future may bring. I have spent nearly two decades studying and applying this method, and have had some great successes by doing so.

For instance, in April 2017, I outlined that there were certain technical developments on the company’s stock chart that suggested that higher stock prices were on the horizon. At the time that publication was written, BBRY shares were trading at $8.07 and they went on to appreciate by 45.48%, before BlackBerry peaked at $11.74.

The following stock chart illustrates the technical price pattern that was highlighted in the publication titled “Reversal Pattern Implies Higher Blackberry Stock Prices.”

BBRY stock chart

Chart courtesy of StockCharts.com

The technical price pattern that is highlighted on the BBRY stock chart is a symmetrical triangle. This pattern is identified using two converging trend lines. The upper trend line represents resistance, while the lower trend line represents support.

Those who frequent my work already know that I am quite enamored with triangle price patterns. These patterns are quite special because they are known for their powerful breakouts.

The power of these patterns is a result of momentum being built and stored within the pattern as it develops. The higher lows and lower highs created by this pattern act like a coiled spring, and the momentum from that coiled spring is finally released when the stock price breaks above resistance or below support.

Also ReadThis Changes the Game for BlackBerry Stock

The size and scope of the pattern is directly related to the reaction that follows once this pattern is completed. This pattern was in development for four years before resistance was finally broken on March 31, when BlackBerry reported better-than-expected earnings. This resulted in a sharp move to the upside, where BlackBerry stock appreciated to the tune of 57.16% before a correction finally ensued.

This correction has been in development for over two months, and it is now testing an important price point.

The following BlackBerry stock chart illustrates the important price point that is currently being put to the test.

BlackBerry price chart

Chart courtesy of StockCharts.com

BBRY stock is currently testing the 200-day moving average. This metric is created by averaging the stock’s closing price over the last 200 days and plotting that value on the stock chart. This metric is watched by many because it serves as a gauge to determine whether an investment is healthy or unhealthy.

Using the 200-day moving average is quite simple. If an investment is trading above the 200-day moving average, it is assumed that the investment in question is healthy and therefore trading in a bull market. Trading below the 200-day moving average carries the exact opposite implication, suggesting that the investment in question is unhealthy, and is therefore trading in a bear market.

On March 31, BlackBerry shares gapped above this moving average, and have been trading above it ever since. The break above this moving average coincided with the completion of the symmetrical triangle. These events carry bullish implications on their own, but as coinciding indications, they reinforce one another.

The 200-day moving average is now being tested from above, and it is common for the moving average to act as a level of price support in a bull market. It is therefore imperative that BBRY stock continues trading above this moving average in order to maintain its bullish posture.

Analyst Take: 

BlackBerry stock is currently testing its 200-day moving average from above. In order to sustain the implications that were created in March of this year when both the 200-day moving average was breached and the symmetrical triangle was completed, BBRY stock needs to maintain its stance above this important and significant price point.