PTOTF Stock: Breaking Above Resistance Will Set the Wheels in Motion
The dreaded month of September is now upon us. The reason why I describe this month the way I do is because September is notorious for being a poor-performing month for stocks. September holds the crown for being, on average, the worst-performing month of the year.
The good news is that once we get through September and October, we enter a seasonal period where stocks tend to perform extremely well.
With this mindset of looking forward, I am focusing on Patriot One Technologies Inc (OTCMKTS:PTOTF, CVE:PAT) stock because I believe it is setting up to make a move toward much higher prices.
The setup I am referring to is a particular technical price pattern. I believe that, if this pattern is resolved in a bullish manner, much higher Patriot One stock prices will follow.
The technical price pattern in question is captured on the following PTOTF stock chart.
Chart courtesy of StockCharts.com
This stock chart captures a technical price pattern known as a cup and handle price pattern.
Cup and handle price patterns are created when a significant level of price resistance prevents the stock price from advancing beyond it. In this case, the level of price resistance resides at $1.50. It was first established on November 29, 2016, the day after Patriot One stock began trading on a public exchange.
Ever since that day, $1.50 has proven to be a formidable level of price resistance. The stock’s inability to move beyond this price point, and the process of testing it, has resulted in the creation of two distinct troughs.
As you can see on the above PTOTF stock chart, the first trough is much larger than the second. It is these troughs that characterize a cup and handle price pattern.
I believe that once resistance is finally broken, much higher prices will follow. There was a valiant attempt made earlier this year, but unfortunately, that attempt was thwarted.
I believe that Patriot One stock is setting up to make another attempt at this level of price resistance. The reason why I believe this is that a bullish signal was recently generated by the moving average convergence/divergence (MACD) indicator, supporting the notion that higher prices are now likely in development.
MACD is a momentum indicator that distinguishes whether bullish or bearish momentum is influencing the price action in a stock. Bullish momentum implies that a stock is geared toward higher prices, while bearish momentum implies that a stock is geared toward lower prices.
This is pertinent information because a stock cannot sustain a move in either direction unless the applicable level of momentum is supporting it.
For example, while the MACD signal lines were in bullish alignment, the stock price sustained a move toward higher values. While the signal lines were in bearish alignment, the stock corrected toward lower values.
A bullish MACD cross was recently generated in August. It is why I currently believe that PTOTF stock is likely to appreciate.
This notion, that the stock price is likely to continue its advance, is also being supported by a wave structure that has been in development since Patriot One stock bottomed in late June.
This wave structure is captured on the following stock chart.
Chart courtesy of StockCharts.com
This chart highlights a wave structure consisting of impulse waves and consolidation waves.
The impulse waves are highlighted in green on the chart above. These waves capture the stage in a bullish trend when a stock stages a sustained move toward higher prices. The consolidation waves are highlighted in purple. These waves capture the stage in a bullish trend when a stock corrects.
These waves feed off each other, creating the necessary conditions for a bullish trend to flourish. Since June 25, these waves have been responsible for taking PTOTF stock from a low of $0.93 to where it currently resides at $1.32.
At this moment, a consolidation wave has just been completed. It, too, is suggesting that another advance, via an impulse wave, is now underway.
The combination of this wave structure and a bullish MACD signal are suggesting that the significant level of price resistance at $1.50 is in the crosshairs. This level is likely going to be tested in the not-too-distant future.
I am watching the price action on the Patriot One stock chart because I believe that once the stock price breaks above $1.50, it will open a door to where much higher PTOTF stock prices will follow.