Groupon Inc: GRPN Stock Chart Continues to Give Bullish Signals
GRPN Stock: Bullish Action
I recently began liking Groupon Inc (NASDAQ:GRPN) stock, and this was a far stretch for myself because Groupon stock has left many with a foul taste in their mouths.
This foul taste stems from GRPN stocks’ exemplary track record of horrendous performance. This character trait of poor performance began on the first day of trading after shares peaked at $31.13. This level still stands as the all-time high in the share price because, in short order, the price of GRPN stock collapsed.
I can probably continue delving into the poor performance of Groupon stock, but this is not my intention. I have already mentioned that I have actually begun liking this position. The past performance actually does play into my bias, but on a different level. My bullish bias is stemming from a change of trend. I no longer believe that the poor performance of the past will continue.
My analysis is centered on the price chart of GRPN stock, and I have reason to believe that the predominant bearish trend has finally been laid to rest and a new bull market has been born in its place .
The following Groupon stock chart illustrates the bear market that dominated trading for 4.5 years.
Chart courtesy of StockCharts.com
The chart above illustrates the major downtrend that contained any bullish price movements. This downtrend that developed was as clear as day, and was created by connecting the peaks on the price chart. A downtrend is defined by price action as the trend moves lower. Lower peaks are confirmed by lower troughs. This trend can easily be identified as the price moves from the upper left to the lower right.
In July 2016, the downtrend line on the Groupon stock chart was broken, and this event defined the moment in time when the bear market went back into hibernation and opened the door for a new bull market. It is at this moment that my opinion toward GRPN stock began to change, but I needed more signals to completely swing my bias.
The following Groupon stock chart illustrates the other signals that reaffirmed my new bullish bias.
Chart courtesy of StockCharts.com
In February 2016, GRPN stock surged higher and then began trading within a descending channel. There are two parallel lines that define this trend and GRPN stock oscillated between these two lines until this pattern was completed.
In April 2016, GRPN stock generated a golden cross within the channel. 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. This signal is used to indicate that a bull market is on the horizon, and I always find it wise to trade in the direction of this signal.
In July 2016, A death cross was executed, but that signal was quickly averted. Averted signals are not to be dismissed, as I have found them to be a powerful indicator. Averted signals have a tendency to accelerate the predominant trend. It was no coincidence that GRPN stock broke out the descending channel shortly after the averted signal.
The breakout In July 2016 was done in spectacular fashion as Groupon stock exploded to the upside, leaving a breakaway gap. Breakaway gaps rarely get filled and almost always signal that new trend has started.
Every signal that was generated on the chart provided above was bullish, and that is why I am currently bullish on GRPN stock.
The bullish signals did not end there, and the following Groupon stock chart illustrates the current bullish price action.
Chart courtesy of StockCharts.com
The GRPN stock chart above illustrates the bullish price action that has now become all too common on bullish price charts. this action is defined by impulse waves that are followed by a consolidation wave before another impulse wave can develop.
A new impulse wave is expected once the consolidation wave is complete. On average, these impulse waves match the length and duration of the first impulse wave.
The lower panel on the chart above is labeled “MACD.” Moving average convergence divergence (MACD) is a simple and effective trend-following momentum indicator. Signal line crossings are used to distinguish between bullish and bearish signals.
A bullish MACD signal would coincide with the completion of the consolidation, and the beginning of a new impulse wave. The MACD indicator is effectively signaling that any extreme levels of optimism that propelled Groupon stock higher have now subsided, and a new leg higher can now begin.
The Bottom Line on Groupon Stock
2016 has seen a 180-degree change in the price action of GRPN stock. The price action is bullish, and the performance continues to surprise. My bias on Groupon stock is bullish and it will remain bullish for as long as the charts warrant this view.
