Technical Analysis: Blackberry Stock Will Soar When This Happens

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BB Stock: $11.80 Is the Magic Number

Once upon a time, BlackBerry Ltd (NYSE:BB) was a household name and the business elites insisted on using its handsets. This also marked an era when Blackberry stock was seen as an incredible investment with great growth prospects. That time has come and gone, and BB stock is no longer seen in that light, but that may change.

I am focusing on this stock because there is a growing number of signs that its stock prices, not its handsets, are ready to make a comeback. This view is based on the price action currently in development on the BB stock chart.

The following stock chart illustrates the price action which suggests that a move toward higher prices is in development.

BlackBerry stock

Chart courtesy of StockCharts.com

Blackberry stock first started making a move toward higher prices in March 2016, when it was finally able to regain its footing above the 200-day moving average.

The 200-day moving average is created by averaging the stock’s closing price over the last 200 days and plotting the value on the stock chart. The 200-day moving average acts as a dividing line that separates bullish investments from bearish ones. When BB stock crossed above the 200-day moving average, it implied that this investment was bullish once again.

This implied bullishness was quickly vindicated because the share price proceeded to appreciate by 56.67% until it met a significant level of resistance, which currently resides at $11.80.

This significant level of resistance spawned a sell-off that caused the share price to return to test the 200-day moving average from above. This moving average proved to be a sound level of support. It reaffirmed that Blackberry shares were still bullish, and it spawned a move toward higher stock prices.

The significant level of resistance continues to prevent the stock price from advancing. In the process, it is painting a potential cup and handle price pattern on the stock chart. This pattern is distinguished by its two distinct troughs, in which the first is much larger than the second.

In order to complete this pattern, BB stock needs to close above $11.80, which will break this level of resistance and imply that higher prices are in development.

This will not be an easy feat because this significant level of resistance coincides with another level of resistance, which is highlighted in the following stock chart.

BlackBerry stock chart

Chart courtesy of StockCharts.com

This Blackberry stock chart illustrates that the level of resistance defined by the cup and handle price pattern coincides with resistance suggested by this downtrend line.

This downtrend line was created by connecting the series of lower highs and it defines the bear market that has decimated this company’s stock price.

This downtrend line began its development in June 2008, when BB stock was trading at $148.13. Almost a decade later, the stock price continues to trade below it. In order to negate the bearish repercussions suggested by this downtrend line, Blackberry stock needs to break above it. In order to do that, resistance at $11.80 needs to be taken out.

Because these two levels of resistance currently coincide, the breakout—when and if it happens—will be quite an explosive event. Given that such a feat would suggest that the decade-long bear market has finally met its match, an explosive move toward higher stock prices will be an excellent way to begin a new bull market

Analyst Take: 

There are two coinciding levels of resistance, and breaking above them would suggest that a new bull market in BB stock is taking shape, and that the bear market that decimated Blackberry stock has finally been put to bed.