TEUM Stock: Waiting for a Confirmation Signal
Micro-cap stocks are a special breed of stocks. Their appeal lies in the notion that tiny market caps can appreciate manifold. This potential for windfall profits is why this category of stocks can be very fruitful but is also very speculative in nature.
Chart courtesy of StockCharts.com
The completed technical price pattern highlighted on the above TEUM stock chart is a symmetrical triangle pattern.
Symmetrical triangles are created when the price action is characterized by a sequence containing a series of lower highs and higher lows.
Capturing this pattern was achieved by connecting the peaks and troughs created by the price action. The end result of this process produces two converging trend lines.
These trend lines pinpoint where significant levels of price support and price resistance. This is important information because only when one of these trend lines is breached is the pattern finally resolved and a powerful move expected to follow.
The reason why a powerful move is expected to follow is because the converging nature of these trend lines causes energy to build within the pattern. This energy is built because when traders identify that this pattern is in development, they position themselves on either side of support and resistance in anticipation of a possible breakout. The longer it takes for this pattern to develop, the more energy is stored within it. This is why the move that follows is directly related to the size of the pattern.
On July 19, 2018, Pareteum stock broke out above resistance, completing the symmetrical triangle. True to its nature, higher prices did prevail and Pareteum stock tacked on 20.39% in a matter of five days.
This symmetrical triangle also doubles as a consolidation wave, and its completion augurs further gains.
The wave structure the consolidation wave is a part of is captured on the following Pareteum stock chart.
Chart courtesy of StockCharts.com
This TEUM stock chart captures a wave structure consisting of impulse waves and consolidation waves.
The waves highlighted in green are impulse waves. These waves capture the stage in a bullish trend when a stock stages a sustained move toward higher stock prices.
The wave highlighted in purple is a consolidation wave. These waves capture the stage in a bullish trend when the stock price corrects and refrains from advancing.
Consolidation waves and impulse waves work together to create and sustain both bullish trends and bearish trends.
The completed symmetrical triangle, which also doubles as a consolidation wave, is suggesting that TEUM stock has begun its next leg toward higher stock prices, via an impulse wave.
Before I get ahead of myself, I need to outline that in order to confirm that an impulse wave is actually in development, a bullish moving average convergence/divergence (MACD) signal is needed.
MACD is a very influential momentum indicator that uses the crossing of a signal line to determine 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 very impactful and influential to the direction a stock is trading in, because a stock cannot sustain a move in either direction unless the applicable momentum is supporting it.
This is the reason why, in a bullish trend, impulse waves are confirmed by a bullish MACD signal. Consolidation waves are confirmed by a bearish MACD signal.
The MACD indicator is currently converging, and a bullish signal is likely to be generated in the weeks ahead. Once a bullish MACD signal is generated, it will confirm that an impulse wave is in development, where higher Pareteum stock prices are likely to prevail.
Until this bullish MACD signal is generated, the impulse wave is unconfirmed.
A number of technical signals are suggesting that Pareteum stock is about to embark on a sustained move toward higher prices. The suggested move toward higher TEUM stock prices will only be confirmed once a bullish MACD signal is generated.