Expedia Inc: EXPE Stock is Setting Up to Fly into Year-End
EXPE Stock: A Bullish Setup
Expedia Inc (NASDAQ:EXPE) stock is among a handful of stocks that are still down on the year. In terms of relative performance, I am giving this name a failing grade because the NASDAQ has gone on to make new highs and this name has managed to lull many investors to sleep with its meandering and uneventful performance year-to-date.
The year is not over, and EXPE stock still has a chance to turn things around. This is the exact reason why I am focusing on this name. I have reason to believe that a strong run into the year-end is about to begin.
I base my reasoning on the information that I have pulled from the EXPE stock chart. I use signals and chart patterns as my guide in delivering a a trading bias. This is the cornerstone of my investment strategies.
I want to stress the importance of using multiple time frames to discern, as well as confirm, the bias. When I screen a stock in order to build a bias, I begin with a longer-term time horizon and then I move to shorter-duration charts. This method keeps me disciplined to my approach and it helps in keeping my biases objective.
The following Expedia stock chart illustrates the bullish trend that has contained the price over that past few years.
Chart courtesy of StockCharts.com
There are two parallel lines that define this bullish trend. The pattern is known as an ascending channel. An ascending channel has two trend lines that define the upper and lower bounds. EXPE stock will oscillate between these two lines for as long as time permits. This bullish trend will end when Expedia stock gathers enough strength to exit this channel, but there is no sign that such an event will happen any time soon.
Expedia stock has spent much of 2016 testing the bottom range of this channel, and all attempts to break through the bottom were halted as buyers showed up to absorb any attempts. It is only reasonable to assume that the next prevailing move is to test the upper range of this channel, and the following EXPE stock chart supports this premise.
Chart courtesy of StockCharts.com
The Expedia stock chart above has two key features that are alluding to higher prices.
The first key feature is the signal generated from the crossing of the moving averages, known as a golden cross. A golden cross is a bullish signal that is produced when a 50-day moving average, highlighted in blue, crosses above a 200-day moving average, highlighted in red. Traders use this signal to confirm that a bull market is on the horizon. It is always wise to trade in the direction of this signal.
The second key feature is the chart pattern that has developed known as an ascending triangle. There are two converging trend lines that make up the triangle, and they represent levels of support and resistance. Trading remains range-bound until one of these levels is broken and then a new trend develops in the direction of the breakout.
Expedia stock is on the verge of breaking out higher above horizontal resistance, and the golden cross confirms that bullish momentum is acting like a tailwind adding fuel to a potential breakout.
The following Expedia stock chart illustrates the short-term bullish developments.
Chart courtesy of StockCharts.com
The price action since the end of June has been extremely bullish. An impulse wave developed, and EXPE stock surged higher, tacking on $23.00 in short order before a consolidation wave developed. This wave runs against the prevailing trend and many bullish waves share this characteristic. This consolidation wave has given way to another impulse wave and it is quite common for impulse waves to match in length and duration.
Based on this premise, the target price for EXPE stock is $129.00, which would effectively break the horizontal line on the ascending triangle, further reinforcing the bullish argument.
The Bottom Line on Expedia Stock
I am bullish on EXPE stock and my bias is strictly based on the price chart. I have reason to believe that a run into the year-end has just developed, and my views will remain with this bias until the price chart of Expedia stock gives me reason to believe otherwise.
