EXAS Stock: Watching and Waiting…
The first quarter of 2018 was not a good one. The markets were plagued with elevated levels of volatility, which was responsible for creating an environment fit for wild market swings. Nothing about wild market swings is conducive to a bull market, so it’s not a coincidence that the markets were weak during this period.
The good news is that the volatility has begun to subside, meaning that the markets can once again make an attempt at higher values. Earnings season has just begun, and if the markets are going to stage an advance, earnings are going to be the catalyst that fuels such a move.
I am currently focusing on EXACT Sciences Corporation (NASDAQ:EXAS) stock.
This is not my first time crossing paths with EXACT Sciences Stock. On April 23, 2017, I published a report titled “The EXACT Sciences Stock Chart Suggests Higher Prices.” I outlined a number of technical developments suggesting why EXAS stock was likely to appreciate, and that is exactly what happened.
Since that date, the stock price has appreciated by 94.05%.
I am returning to EXAS stock because it is potentially setting up to make another move. I am going to outline the technical indicators I am currently watching that would suggest that another move toward higher EXAS stock prices is in development.
The first indication involves the technical price pattern that is highlighted on the following EXACT Sciences stock chart.
Chart courtesy of StockCharts.com
The pattern highlighted on the EXAS stock chart is a descending channel. A descending channel is a bearish pattern characterized by price action that contains a series of lower highs and lower lows, which is the quintessential characteristic that defines all bearish trends.
I defined this pattern by connecting the respective levels of lower highs and lower lows, which creates two downward-sloping parallel trend lines. These trend lines define price resistance and price support.
In order to negate the bearish repercussions suggested by this descending channel, EXACT Sciences stock would need to break above the trend line representing price resistance.
Breaking above resistance would be a significant feat because, in the context of the wave structure highlighted on the following EXAS stock chart, it would imply that a sustained move toward higher stock prices is in development.
Chart courtesy of StockCharts.com
This EXACT Sciences stock chart highlights a wave structure that has been responsible for creating and sustaining a bullish trend in EXAS stock.
This wave structure consists of impulse waves and consolidation waves.
Impulse waves are advancing in nature, and they capture the stage in a bullish trend where a stock makes a sustained move toward higher prices.
Consolidation waves are corrective in nature and they capture the stage in a bullish trend where the stock price corrects and refrains from staging a price advance.
The descending channel currently in development is a consolidation wave. Its corrective price action is creating the necessary foundation from which an impulse wave can launch. Breaking above price resistance would imply that such an event is unfolding, which would be confirmed by the moving average convergence/divergence (MACD) indicator.
MACD is a trend-following momentum indicator that uses the crossing of a signal line to distinguish between bullish and bearish momentum. Bullish momentum implies that a stock is likely to appreciate, while bearish momentum implies that a stock is likely to depreciate.
Deciphering momentum is a very influential tool because a sustained move in either direction cannot occur unless the applicable momentum is supporting it. This is why the waves within the wave structure have coincided impeccably with the signals generated by the MACD indicator.
Every bullish MACD cross has coincided with an impulse wave, and every bearish cross has coincided with a consolidation wave. The MACD indicator is currently is converging, and a break above price resistance will likely coincide with the creation of a bullish MACD cross.
These signals would suggest that a sustained move toward higher EXACT Sciences stock prices is in development.
I am watching a number of technical indications on the EXACT Sciences stock chart because I believe they will indicate when the next sustained move toward higher EXAS stock prices is set to begin.