Garmin Stock Is Setting Its Crosshairs on $79.00

Garmin stock
credits:istock.com/bluebay2014

GRMN Stock: Anticipating Higher Stock Prices

I originally focused on Garmin Ltd. (NASDAQ:GRMN) stock because a very compelling price pattern was in development, which would dictate what would happen next with GRMN stock. I outlined these developments in a report published on September 18, titled, “Garmin Stock Is Setting the Stage for an Explosive Breakout.”

A couple of months have passed since that report, and the pattern that was highlighted in it has long been completed. In the meantime, Garmin stock has appreciated by 20.65%. The reason why I am focusing on GRMN stock once again is to outline the repercussions suggested by that pattern, which involve a much-coveted price objective.

The following Garmin stock chart illustrates the completed technical price pattern that continues to suggest that higher stock prices are on the horizon.

Garmin stock

Chart courtesy of StockCharts.com

The technical price pattern highlighted on the GRMN stock chart is a cup and handle pattern.

The cup and handle price pattern develops because a significant level of price resistance prevents the stock price from advancing. This level of price resistance resides at $54.00 and was first established in June 2014.

Following its establishment, a significant sell-off ensued, where Garmin stock lost 47.37% of its value before a bottom was finally forged in October 2015. In August 2016, it returned to test this level of resistance, but after a two-year hiatus, it was unable to punch through it on its first attempt. This first attempt created the cup.

From August 2016 to September 2017, the stock price languished underneath this level of resistance. On September 25, the stock price broke above resistance, carving out the handle, which completed the cup and handle price pattern.

This feat implies that higher prices are now in development. The great thing about this price pattern is that aside from just suggesting that higher prices are in development, it also provides a much needed and coveted price objective.

This price objective is obtained by taking the depth of the cup and extrapolating that value above the significant level of price resistance that created the pattern. Applying this logic to the cup and handle price pattern on the GRMN stock chart produces a price objective of $79.00.

This objective is very significant because it coincides with a number of metrics.

These metrics are illustrated on the following Garmin stock chart.

Garmin stock

Chart courtesy of StockCharts.com

There are two distinct metrics highlighted on this Garmin stock chart: the ascending channel and the previous all-time high.

The ascending channel is highlighted in blue, and it is created by using two parallel upward-sloping trend lines. One trend line is created by connecting the series of highs and it represents resistance. The other is created by connecting the series of lows and it represents support.

This ascending channel defines the bullish trend in GRMN stock that began in the aftermath of the financial crisis. Using this channel as a tool is quite simple, and as long as the stock price continues to oscillate within it, the bullish trend is intact, and therefore, higher stock prices are still in development.

The previous all-time high is highlighted in purple and it was created in October 2007. It marked the high in Garmin stock prior to the financial crisis, which decimated stock prices.

This previous all-time high resides at $83.19 and resistance outlined by the ascending channel resides just north of $80.00. If I compare these metrics with the $79.00 price objective suggested by the completed cup and handle price pattern, it becomes a striking coincidence that all these levels roughly line up. The problem with this notion is that I do not believe in coincidences, and neither does the method I use when analyzing a company’s stock chart.

These coinciding metrics suggest that these GRMN stock price objectives are not only significant but also credible.

Analyst Take:

Garmin stock completed a technical price pattern on September 25, which is suggesting that much higher stock prices are now in development. I currently hold a bullish view on GRMN stock, expecting that the price of objective suggested by this pattern will be attained. Therefore, I will maintain this bullish view until either that objective is met or there are indications on the stock chart that suggest another view is warranted.