A Move Toward Much Higher LSCC Stock Prices Is Now in Development

LSCC stock

LSCC Stock Has Just Completed a Very Large Technical Price Pattern 

It’s official: the current bull market is now the longest in history, putting all the naysayers to bed. This upward move following the last financial crisis has been exquisite. The stocks and sectors supporting each leg have been varied, which is why this bull market has lasted as long as it has.

Technology stocks have been at the forefront of this move. This is why the Nasdaq composite index continues to defy gravity by forming new all-time highs. Semiconductor stocks are on the move once again, which is why I am currently focusing on this sector.

I have chosen to focus on Lattice Semiconductor Corp (NASDAQ:LSCC) stock because it has just completed a technical price pattern that has set the wheels in motion, suggesting that higher Lattice Semiconductor stock prices are likely to follow.

This completed technical price pattern is highlighted on the following LSCC stock chart.


Chart courtesy of StockCharts.com

The completed technical price pattern highlighted on the above chart is a diamond pattern.

Diamond patterns are created by price action that begins with a series of higher highs and lower lows. This then transitions into a series of lower highs and higher lows.

Capturing this pattern was achieved by connecting the peaks and troughs that were created by the price action. The end result is a diamond price pattern that consists of a combination of two triangle price patterns. The first one is an expanding triangle pattern and the second one is a contracting triangle pattern.

The trend lines that define this pattern are very significant because they show where significant levels of price support and resistance reside. These levels are important because, in order to complete the pattern, Lattice Semiconductor stock needs to escape from the pattern.

On July 27, LSCC shares surged in price following a better-than-expected earnings report. This price action caused the stock to break above the trend line that represents price resistance, completing the diamond price pattern. This event, marked as a breakout on the stock chart, is suggesting that further gains are likely to follow.

This notion of higher stock prices suggested by the completed price pattern is magnified when it is combined with the price action that preceded it.

This combination of price action creates a wave structure, which is highlighted on the following LSCC stock chart.

Chart courtesy of StockCharts.com

This chart illustrates a constructive wave structure consisting of impulse waves and consolidation waves. These waves are responsible for creating and sustaining a bullish trend.

Impulse waves are advancing in nature. They capture the stage in a bullish trend when a stock makes a progressive move toward higher prices.

Consolidation waves are corrective in nature. They capture the stage in a bullish trend when a stock price corrects and refrains from advancing.

The diamond price pattern doubles as a very large consolidation wave that has been in development for eight years. Its completion implies that an impulse wave is likely to follow, suggesting that a sustained move toward higher Lattice Semiconductor stock prices is now in development.

This notion of a sustained move toward higher prices is being reinforced by the momentum indicator highlighted on the following chart.

Chart courtesy of StockCharts.com

The momentum indicator highlighted in the lower panel of the above LSCC stock chart is the moving average convergence/divergence (MACD) indicator.

MACD is a trend-following momentum indicator used to distinguish whether bullish or bearish momentum is influencing the price action in a stock. Bullish momentum implies that a stock is geared toward higher prices. Bearish momentum implies that a stock is geared toward lower prices.

Momentum is a very influential force. A stock cannot sustain a move toward higher or lower prices unless the applicable level of momentum is supporting it. This is exactly why this indicator has the propensity to correctly confirm the direction in which a stock is trading.

Every bullish MACD signal highlighted on the Lattice Semiconductor stock chart was followed by a move toward higher prices. Every bearish MACD signal was followed by a move toward lower stock prices.

The completion of the diamond price pattern has coincided with a bullish MACD signal. These indications reinforce the notion that LSCC stock is likely to sustain a move toward higher prices via an impulse wave.

Analyst Take

I am bullish on Lattice Semiconductor stock because I believe that higher prices are on the horizon.

My beliefs are based on a number of technical indications that are currently supporting this view. As a result, I will maintain a bullish view until there are technical indications suggesting that a bullish view is no longer warranted.