ENS Stock: Higher Prices Are Expected
I have excellent news to share regarding EnerSys (NYSE:ENS) stock. The beautiful bullish pattern that was the subject of my previous publication on this company, “The EnerSys Stock Chart Is a Bullish Masterpiece,” has resolved itself in a bullish manner that serves to suggest that higher ENS stock prices are on the horizon.
The pattern that was developing was simply striking, and outlining the key developments that are likely to follow is going to be sheer pleasure.
If this is your first time reading one of my publications, it is worthy to note that the views I develop on a potential investment are generated using technical analysis. This method of investment analysis is predicated on using historical price and volume data to discern a trend and forecast future prices. As a result, my views on a particular investment are based on the indicators and price patterns that develop on a company’s price chart.
The following EnerSys stock chart illustrates the indications that support a bullish view.
Chart courtesy of StockCharts.com
There are two distinct metrics or indications on the price chart above which suggest that a bullish view is warranted.
The first indication stems from the bullish constructive price action that began in late 2012. Bullish constructive price actions consists of a two-wave structure that is composed of an impulse wave and a consolidation wave.
The function of an impulse wave is to advance a price in a linear motion. This wave is highlighted in green on the price chart above. The function of the consolidation wave is to unwind any overbought conditions that were created during the advance and, more importantly, set up the next advancing impulse wave. This wave is highlighted in purple on the price chart above.
This alternating wave structure creates the necessary building blocks that allow a price trend to remain sustainable. In November 2016, ENS stock exited the consolidation wave in an upward direction, suggesting that a new impulse wave was set to develop.
The bullish implications suggested by the price action are also supported by the second metric, the moving average convergence/divergence (MACD) indicator. MACD is a simple yet effective trend-following momentum indicator that uses signal-line crossings to distinguish between bullish and bearish momentum. This indicator has been extremely effective in confirming the predominant wave that is in force.
In June 2014, a bearish MACD cross was generated, indicating that bearish momentum was driving ENS stock. As a result, the path of least resistance was geared toward lower prices. This indicator did an excellent job at identifying and confirming that an impulse wave had concluded, and that a consolidation wave was set to develop.
In July 2016, a bullish MACD cross was generated, indicating that bullish momentum was now driving EnerSys stock and, once again, this meant that the path of least resistance was now geared toward higher prices. This indicator once again did an excellent job at identifying and confirming that the consolidation wave had concluded, and that a new impulse wave was set to develop.
The combination of these two distinct measures acts to suggest and support the view that higher stock prices are likely to follow.
The following EnerSys stock chart illustrates the textbook breakout that is reinforcing the view that higher stock prices are on the horizon.
Chart courtesy of StockCharts.com
This ENS stock chart contains similar constructive price action, but on a smaller scale. The price chart above focuses on the trading action that occurred after the price exited the larger consolidation wave.
I was watching the current consolidation wave that was in development for four months, awaiting a resolution. There is no need to wait anymore. On April 24, 2017, ENS shares exited the consolidation wave in an upward direction, suggesting that a new impulse wave is now in development. This feat was a textbook breakout, and the implications can only be interpreted as bullish.
The short-term and long-term price charts both support the notion that an impulse wave is now set to develop. This view will be confirmed after EnerSys shares close above $83.33, implying that much higher prices are likely to follow.
The price action on the chart above is useful on many fronts and, aside from suggesting the next direction that the price is headed in, it is also instrumental in generating a potential price objective. This objective is obtained by using the theory behind this wave structure. The theory states that impulse waves that are separated by a consolidation wave tend to mirror each other in terms of length. Applying this theory to the constructive price action above produces a potential price objective of $94.00.
Bottom Line on EnerSys Stock
EnerSys stock has just completed a textbook breakout, which acts to reinforce the view that higher stock prices are on the horizon. I will continue to hold a bullish view on ENS stock, as long as indications on the price chart support this view.