This Pattern Will Determine What Happens Next With NIHD Stock
The recent swoon that inundated the stock market with selling pressure has done a number on the market, and it has forever changed my perception of what I believe is likely going to unfold. I am no longer bullish on the stock market. I am cautious, at best.
I believe that the sell-off that recently struck the markets has broken a number of stocks and indices, suggesting that the bull market that began in 2009 is fractured. This opens the door for further downside risk.
Just because I believe that the markets are now susceptible to further losses, it does not mean there is not a bull market somewhere. In fact, some of the best stocks are found during sell-offs because they end up sticking out like sore thumbs.
Take NII Holdings Inc (NASDAQ:NIHD), for instance. NII Holdings stock has not been affected by the selling pressure. Instead, this stock has been caught in a trading range, and it has actually been making some headway in recent weeks.
The trading range I am referring to is captured on the following NIHD stock chart.
Chart courtesy of StockCharts.com
The trading range captured on the above chart is bound by price resistance at $7.30 and price support at $4.20. That makes it a fairly large range in both dollar and percentage terms.
The information provided by this trading range is very important because it will determine what the stock does next. For instance, if NIHD stock can break above price resistance, it will suggest that higher stock prices are likely to follow. Breaking below price support will suggest that lower prices are likely to follow.
Taking a step back from this trading range can help us get a better grasp of what may come next.
The following chart captures the price action that preceded the trading range.
Chart courtesy of StockCharts.com
This NII Holdings stock chart illustrates that since November 30, 2017, a bullish trend has been in development.
This bullish trend consists of a sequence containing a series of higher highs and higher lows. This price action is the quintessential characteristic of all bullish trends.
This price action has been responsible for taking the NIHD stock price from a low of $0.22 to where it currently resides at $6.28. This represents an astonishing 2,754.55% return in under a year’s time.
The trading range that was highlighted earlier will determine whether this bullish trend is set to continue. Breaking above price resistance will create a higher high, reinforcing the notion that the bullish trend is still in development. Breaking below price support will create a lower low, suggesting that a new bearish trend has begun.
At the moment, speculating on the next move is a difficult task because the market conditions are quite turbulent. Yes, the stock has held up well, given these conditions. That’s a bullish indication, but it does not eliminate the possibility that, if these turbulent conditions persist, selling pressure will finally overwhelm this stock.
The best course of action is to take a “sit back and wait” approach. Any outcome is possible, so I am waiting for NII Holdings stock to either break above or below price support.
I am watching the price action on the NII Holdings stock chart because a resolution of the trading range will determine whether the bullish trend in NIHD stock that began on November 30, 2017 is set to continue.