Expedia Stock Is Testing an Important Level of Price Support

EXPE stock
Credit:iStock.com/Cristian Storto Fotografia

EXPE Stock: Bullish Expectations

I started covering Expedia Inc (NASDAQ:EXPE) stock in September of last year where I outlined in a publication titled “Expedia Inc.: EXPE Stock Chart is Suggesting That a Big Move is in the Making” that there were a number of developments on the company’s stock chart that were suggesting a big move towards higher stock prices was in the making. This is exactly what has transpired as Expedia stock appreciated by 26.71% since September 8, 2016. when that publication was published.

My views in that publication were generated using technical analysis, which is my preferred method of choice when analyzing an investment. The signals that this method provides are timely, and therefore, using them to create an investment strategy is extremely valuable. The resulting performance is a testament to the value this method of investment analysis can provide.

I am returning to focus on this investment because it is currently testing a very important and influential level of price support. I am still bullish on Expedia stock and therefore believe that a bounce will occur off this level and higher stock prices will prevail.

The following EXPE stock chart illustrates the important and influential levels of price support that are currently being tested.

EXPE stock chart

Chart courtesy of StockCharts.com

This Expedia stock chart illustrates that two coinciding levels of price support are currently being tested.

The first level of price support is defined using the previous all-time high that was attained in 2015. Prior to breaking above this level in May 2017, this level acted as a level of price resistance. The great thing about significant levels of resistance is that once they are broken, they become significant levels of price support. It is quite common for the share price to return to this level and test it from above, reaffirming that it is, in fact, a new level of price support.

This level of price support currently coincides with the uptrend line. This uptrend line defines the bullish trend in Expedia stock, which contains the quintessential characteristic that defines all bullish trends: a series of higher highs and higher lows. Creating this uptrend line is easily accomplished by connecting the series of higher lows that defined this bullish trend.

This significance of this uptrend line is difficult to refute because it has been tested a number of times, and each time, investors continue to step in and support it. It is safe to assume that as long as EXPE stock continues to trade above this uptrend line, the bull market in this investment remains in development.

These influential levels of price support are not the only indications supporting the notion that a bull market is still in development.

The following Expedia stock chart illustrates an influential momentum indicator suggesting that the path of least resistance is geared towards higher EXPE stock prices.

Expedia price chart

Chart courtesy of StockCharts.com

The focus of this EXPE stock chart is the moving average convergence/divergence (MACD) indicator, which is located in the lower panel.

MACD is an influential momentum indicator that is used to distinguish between bullish and bearish momentum. Signals are generated using the crossing of a signal line.

Past signals are a testament to the weight a bullish or bearish MACD cross carries.

In January 2014, a bullish cross was generated, indicating that bullish momentum was influencing trading action in Expedia stock. This signal created a path of least resistance geared toward higher prices. While this indicator was engaged in a bullish cross, EXPE shares appreciated by 53.85%.

In January 2015, a bearish cross was generated, indicating that bearish momentum was influencing the trading action in Expedia stock. This signal created headwinds that prevented Expedia share from advancing. This bearish MACD cross indicated that the bullish advance that began in January 2014 was due for a breather.

Which leads us to the current bullish MACD cross that was generated in April of this year. This indication is suggesting that bullish momentum is influencing the stock prices, and it should come as no surprise that this investment staged an advance while this indicator was engaged.

The MACD indicator remains in bullish alignment, supporting the notion that a bullish move towards higher stock prices is still in development.

Analyst Take: 

Expedia stock is currently testing an important level of price support that is being suggested by two distinct metrics. As long as EXPE stock remains above this level of price support, then it is safe to assume that the bull market in this investment is still in development. An underlying momentum indicator is supporting this notion because it creates a path of least resistance that is geared towards higher stock prices.