INTC Stock: A Powerful Move Is Brewing
I’m focusing on Intel Corporation (NASDAQ:INTC) stock because nothing gets me quite as excited as witnessing a technical price pattern develop. That may sound corny, but it is the truth. This excitement stems from the fact that technical price patterns provide a glimpse of what the future may bring.
A compelling price pattern is currently being painted on the Intel stock chart that suggests an explosive move is brewing in the INTC stock price.
Explosive moves are definitely a reason for excitement, especially if such a move in the stock price can be exploited. This news is especially good for INTC stock investors because Intel stock has been caught in the mud as of late, and has not been participating in the current market advance.
In early October 2016, Intel stock peaked at $37.50, and has been trading sideways ever since. This sideways trading range has been characterized by lower highs and higher lows. Connecting these lower highs and higher lows creates an ascending triangle. This ascending triangle price pattern is the source of my excitement.
The following Intel stock chart illustrates the technical price pattern that is currently in development.
Chart courtesy of StockCharts.com
Triangles are particularly powerful price patterns because they are known to set up an explosive reaction once the pattern is finally resolved. The source of this explosive power is generated by this price pattern’s ability to store momentum as it develops. The development of this pattern is characterized by a contraction of the range between support and resistance. This contraction of space captures a battle that is being waged between bullish and bearish investors.
These two camps are trying to gain a foothold on the next direction that INTC stock is going to take. This battle is finally won when the stock price either breaks above resistance or below support. Such a feat would suggest that the pattern is complete, and that a victor is crowned. At this point, the losing camp turns tail and unwinds its respective position, fueling the reaction that follows when the pattern is finally resolved.
This ascending triangle is actually just a piece of a much larger wave structure that carries significant implications. The following Intel stock chart illustrates this much larger wave structure.
Chart courtesy of StockCharts.com
This larger wave structure illustrated on the price chart above is what I refer to as constructive price action. Constructive price action consists of an alternating two-wave structure, which is made up of impulse waves and consolidation waves. These waves create the necessary framework for a sustainable trend.
An impulse wave is where a stock stages an advance. Once this advance concludes, a consolidation wave develops. The consolidation wave acts to unwind any overbought conditions that were created when the stock price staged the advance. Unwinding an overbought condition creates the necessary environment where a new impulse wave can develop.
In July 2016, INTC stock exited the consolidation wave in an upward direction, suggesting that a new impulse wave was set to develop. This impulse wave has yet to show its face. Instead, an ascending triangle has developed. A bullish resolution of the ascending channel would suggest that the elusive impulse wave I am waiting for will indeed develop.
The moving average convergence/divergence (MACD) indicator has reached a point which suggests that a resolution to the ascending triangle is near. MACD is a momentum indicator that uses signal-line crosses to distinguish between bullish and bearish momentum. This indicator has been instrumental in confirming whether the stock price is set to decline or advance.
In October 2013 and in July 2016, a bullish MACD cross effectively suggested that the stock price was being motivated by bullish momentum and was therefore set to advance. Similarly, in April 2015, a bearish cross effectively suggested that the stock price was being influenced by bearish momentum and was therefore set to decline.
Currently, the MACD indicator is converging and, in order to avert a bearish cross, higher INTC stock prices are needed. An averted signal carries more precedence than a regular indication because it takes a great deal of buying pressure to avert a bearish signal. Averted signals are extremely powerful and, in order to avert a bearish cross, a bullish resolution of the ascending triangle is needed as soon as possible.
I am leaning toward a bullish resolution, because the general market indices are forging new all-time highs, which means there is a general amount of enthusiasm towards investments. This view is being reaffirmed by the semiconductor index, which continues to lead the market higher.
Bottom Line on Intel Stock
There is an explosive move brewing in Intel stock. This view is based on a developing technical price pattern and indications on the INTC stock chart. The direction of this move is predicated on the direction in which the stock price breaks out of the technical price pattern that is currently in development.