BOX Stock: All Set for a Rip
Box Inc (NYSE:BOX) stock is very elegant. If you’re wondering why exactly I am saying that, let’s just say it has everything to do with the BOX stock chart. Yes, that is correct, I am guilty of analyzing an investment by garnering indications from its stock chart. This seemingly ludicrous method of investment analysis is known as technical analysis. I can attest—and perhaps so too can readers who frequent my publications—that this method provides a tremendous amount of value.
The BOX price chart is elegant because it abides to simple technical rules quite well. It is as if the stock was sent to technical obedience school. Aside from its well manners, this investment is setting up quite a compelling picture, which upon completion would be suggesting that a higher stock price is likely to follow.
BOX stock has all the necessary ingredients that are required to create a potential investment strategy. These ingredients consists of a defined level of risk and an indication of which direction the stock price is heading in next.
The following BOX stock chart illustrates a few of these ingredient that are necessary in creating an investment strategy.
Chart courtesy of StockCharts.com
There has been an elegant bullish trend that has developed off the July 2016 lows. The price action consistent within this trend contains the characteristic of higher highs and higher lows, which is required to label this a bullish trend.
This bullish-labeled trend also has a stamp of approval from a golden cross, which was generated in September 2016. A golden cross is a signal that is generated when the faster 50-day simple moving average crosses above the 200-day simple moving average. This indicator illustrates that the average price over the last 50 days is higher than the average price over the last 200 days, indicating that the stock price is trending higher. This indicator is extremely popular among the trading community because traders use this signal to confirm that a bullish trend is in development.
This bullish trend is easily and effectively defined using a simple uptrend line, a line that is created by connecting significant lows on the price chart. This trend line serves many purposes, and other than identifying the direction a trend is heading in, it also serves to define risk. Defining risk is one of the necessary ingredients required in creating an investment strategy.
As long as BOX shares are trading above the trend line, I can only justify a view where higher stock prices are likely to prevail. A break below this trend line would serve to suggest that the predominantly bullish trend has concluded, which would be grounds to exit a bullish investment strategy.
I have confidence in using this trend line to define risk because this trend line has been tested on numerous occasions, and buyers continue to support this investment at this dynamic level. Through much of March and April, BOX stock was trading right on top of this trend line and managed to remain above it in an orderly manner. It is actually quite special to see such obedience to a trend line.
The following BOX stock chart illustrates the final set of ingredients that are needed to create a potential investment strategy.
Chart courtesy of StockCharts.com
The BOX price chart above illustrates a couple of indications that will be instrumental in suggesting which direction BOX shares will be heading in next.
There is resistance level at $18.40 that is highlighted on the chart above. There was as attempt to get beyond this price point in February, but after two failed attempts, a correction quickly ensued. BOX shares proceeded to test support outlined by the uptrend line. After trading along this level of support for much of March and April, BOX is once again attempting to break above $18.40.
A break above this level of resistance would indicate that higher prices are likely to follow. Such an event would also coincide with a bullish cross of the moving average convergence/divergence (MACD) indicator located in the lower panel of the price chart.
MACD is a trend-following momentum indicator that is used to distinguish between bullish and bearish momentum. This indicator is generated when signal lines cross. These signal lines are currently converging and a break above resistance will generate a bullish cross, which would serve to suggest that going forward, BOX shares are being influenced by bullish momentum. This dynamic suggests that higher stock prices are on the horizon, because under such conditions, this is the path of least resistance.
This confluence of indicators is the last necessary ingredient needed to create an appropriate investment strategy for BOX stock.
Bottom Line on BOX Stock
BOX stock is setting up to make an advance, and this bullish view will be confirmed when the share price crosses and closes above resistance at $18.40.