EXPE Stock: Setting Up to Run
I am focusing on Expedia Inc (NASDAQ:EXPE) stock because a lot has happened since my last update on this name.
The premise of my last update was that EXPE stock was still down on the year, and that it was lagging behind its counterparts as the NASDAQ index was making new highs. I had reason to believe that EXPE stock was setting the stage to run into year-end.
I am happy to say that Expedia stock has made some headway, and the bullish objective I laid out came to fruition as my initial target price for EXPE stock at $129.00 was hit on October 28, and that day also marked the year-to-date high.
The reason for this update is not to gloat. There have been further positive developments in the price chart, and Expedia stock is setting up to move. This run higher has the potential to be epic.
The following Expedia stock chart illustrates the developments since my last update.
Chart courtesy of StockCharts.com
EXPE stock completed the ascending triangle by closing above the horizontal level of resistance. An ascending triangle is a pattern that contains two converging trend lines. One line represents resistance and the other represents support. The price bounces from each respective trend line, and momentum is built each time this occurs. When the price breaks out of this pattern, this energy is released and a substantive run in the share price follows.
In August, EXPE stock generated a golden cross. A golden cross is a bullish signal that is produced when a faster 50-day moving average (highlighted in blue) crosses above a slower 200-day moving average (highlighted in red). This signal is used by traders to confirm that a bull market is on the horizon, and it effectively created the bullish tailwind that was necessary to complete the ascending triangle.
My initial target price on Expedia stock has been met, and it has now returned to backtest the breakout. A backtest is when a price returns to a previous price level that acted as resistance, and EXPE stock has successfully bounced off this level. This type of price action is not uncommon, and the backtest serves to reaffirm that the breakout was legitimate.
The following Expedia stock chart illustrates the positive developments over a longer-term view.
Chart courtesy of StockCharts.com
The Expedia stock chart above illustrates that the long-term trend pattern has developed. 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. There are no signs that such an event will happen any time soon. On the contrary, it seems like Expedia stock is now resuming its trend toward higher prices.
The ascending channel looks tiny when it is projected on this scale. The support that is based on this channel is the exact same trend line that created support for the ascending triangle. The entire triangle was a price base that developed on price support. The recent breakout has opened up the door so that the price can now run and test the upper trend line of the ascending channel.
The backtest has confirmed that the basing pattern is now complete, and that an epic run toward higher prices outlined by the ascending channel is most likely underway. The projected price is difficult to ascertain, but it is much higher than the current levels. The longer it takes to reach this level, the higher the protected price will be because, as time progresses, that level continues to rise.
Bottom Line on Expedia Stock
I am extremely bullish on Expedia stock. The current price action has only reaffirmed my current view, and I believe that EXPE stock is about to stage an epic run.