Is BOX Stock Still Destined for Sky-High Stock Prices?

box stock analysis
iStock.com/castillodominici

Box Stock: Anticipating That Epic Move

I am returning to take a look at Box Inc (NYSE:BOX) stock because I have the inclination to believe that the epic move I have been anticipating is now on the horizon.

I originally laid out my bullish views on Box stock on May 10, 2018, in a publication titled “BOX Stock Is Ripe for an Epic Move Toward Higher Prices.” In it, I highlighted a completed technical price pattern that was responsible for creating my bullish view because it was suggesting that much higher stock prices were likely to follow.

Since that publication, the share did appreciate, but it has yet to sustain a move toward higher prices. Currently, Box stock sits at around $26.61, which is not much higher than it was on May 10. Flat performance is not exactly awe-inspiring, but I continue to believe that the implications suggested by the completed technical pattern are going to play out.

The technical price pattern I am referring to is highlighted on the following stock chart.

Chart courtesy of StockCharts.com

The technical price pattern highlighted on the stock chart is a cup-and-handle pattern.

Cup-and-handle price patterns are created when a significant level of price resistance prevents the stock price from advancing. The level of price resistance, in this case, resided at $24.00.

The inability to move beyond this point was responsible for creating two distinct troughs, where the first trough is much larger than the second. These troughs and the significant level of price resistance are what characterize a cup-and-handle price pattern.

On May 4, 2018, Box stock sustained a close above resistance, completing the cup-and-handle pattern. This suggested that higher prices were likely to follow.

Aside from just suggesting that higher prices are likely to follow, which is the basis of my bullish view, the cup-and-handle price pattern is also kind enough to provide a much-needed price objective.

A price objective is obtained by taking the depth of the cup and extrapolating that value above the level of price resistance that was responsible for creating the pattern. This process produced a price objective of $38.00, which is still in effect. From its current price, this suggests that Box stock can appreciate further by 45.37%.

45.37% is a very respectful potential return, but I have reason to believe that the price objective suggested by the cup-and-handle price pattern is just the beginning of a move toward much higher prices. The reason why I believe so is because the level of price resistance that defined the cup-and-handle price pattern was also the long-standing all-time high.

This long-standing all-time high was created shortly after inception. Breaking above it removed the last level of price resistance that could contain the stock price, opening up the possibility for sky-high prices.

This is a characteristic shared among some of the best-performing stocks. If you are looking for examples, Shopify Inc (NYSE:SHOP) and Facebook, Inc. (NASDAQ:FB) share this exact characteristic. When they broke above their long-standing highs, it was the beginning of an epic move toward higher prices, which is still in development.

I have reason to believe that the epic move I am expecting is now on the horizon. These expectations are a result of the price action that followed the break above resistance.

The price action I am referring to is highlighted on the following BOX stock chart.

Chart courtesy of StockCharts.com

This stock chart focuses on the price action that occurred after the cup-and-handle price pattern was completed.

After an initial surge higher, Box stock has returned to test the previous all-time high from above. Testing a previous level of resistance is referred to as a backtest. Backtests are both important and significant because they serve to reaffirm that the original break above resistance was legitimate, while simultaneously establishing that level as a new level of price support.

Backtests have a tendency to act like springboards. Once this one has been completed, I will have the inclination to believe that higher stock prices will follow, initiating that epic move I am anticipating.

Analyst Take

A completed cup-and-handle price pattern is responsible for suggesting that higher Box prices are on the horizon. The price action that followed the completion of this pattern is serving to reaffirm this bullish view. As a result, I am bullish on this stock and will maintain this view as long as BOX stock is trading north of $24.00.