Qorvo Stock is Only Moments Away from a Breakout

Qorvo Inc Stock
credits:istock.com/Madmaxer

QRVO Stock: Bullish Expectations

The market has taken a turn for the worst, and the catalyst causing investors the angst that is leading them to run for the exits is a sell-off in the bond market, which has translated into higher interests rates. The Dow just witnessed its largest one-day drop since the financial crisis posted a 666 point loss.

There is a lesson to be learned here, which is that the markets are finicky and can quickly change from a low volatility in an environment where the markets appreciate every day to a high volatility sell-off, catching many off-guard.

This is why it pays to make sure that any chosen investment is performing in-line with expectations, especially in times of market duress. In my context as a technical analyst, it means that all the indications that created my bullish view on an investment remain in bullish alignment.

Let’s use semiconductor company Qorvo Inc (NASDAQ:QRVO) stock as an example. I am bullish on Qorvo stock because a number of indications on the companies stock chart are in bullish alignment, supporting the notion of higher QRVO stock prices. The kicker that sets it apart from others at this current juncture is that there is a technical price pattern that is approaching completion that will act as a catalyst, suggesting that much higher prices are likely to follow.

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The following Qorvo stock chart illustrates the technical indications responsible for creating my bullish view:

Qorvo Inc Price Chart

Chart courtesy of StockCharts.com

This stock chart contains a bullish trend that has been in development since the financial crisis concluded in 2009.

This bullish trend is easily identified because it contains the quintessential characteristic that defines all bullish trends, which is a stair-step price sequence made up of higher highs and higher lows.

This uptrend line (highlighted in blue) was created by connecting the sequence of higher lows. This uptrend line not only serves to capture this exquisite bullish trend, but it also defines a significant level of price support, which acts as a dividing line that determines whether this investment is in a bullish state or a bearish one.

Using the uptrend line is quite easy, and determining which state QRVO stock is in is as easy as pinpointing which side of the trend line it’s trading on; above it is bullish, below it is bearish.

Qorvo stock has been trading above this uptrend line since the bullish trend was created in 2009, and the alignment of the moving average convergence/divergence (MACD) indicator supports the notion that further gains are on the horizon.

MACD is a simple trend-following momentum indicator that uses the crossing of a signal line in order to distinguish whether bullish or bearish momentum is influencing the trading action in an investment. The information provided by this indicator is significant and influential because, in order for an investment to stage a sustained move in either direction, the applicable momentum is required.

I have labeled instances where the MACD indicator has suggested whether bullish or bearish momentum was influencing the price action, and in each instance, a bullish cross resulted in a price advance, and a bearish cross resulted in a price decline.

The MACD indicator is currently in bullish alignment, suggesting that higher stock prices are in development. The implications of this indication are magnified by its inability to generate a bearish cross, reinforcing this notion that a bull market is still in development and higher prices are likely.

The uptrend line and the MACD indicator have created a bullish backdrop. The following Qorvo stock chart illustrates the technical price that’s suggesting a possible explosive move is on the horizon:

Qorvo Inc Chart

Chart courtesy of StockCharts.com

This QRVO stock chart illustrates that since the middle of 2015, a very large  “cup and handle” price pattern has been in development. This pattern is created because a significant level of price resistance prevents the stock price from advancing.

This inability to advance has caused and created the development of two distinct troughs, where the first is much larger than the second. These troughs and the significant level of price resistance are what characterizes the pattern.

A break above resistance would complete this very large pattern, suggesting that much higher QRVO stock prices are likely to follow.

Analyst Take

Even though the market has suffered a setback, Qorvo stock is a perfect example of an investment setting up to a make a move toward higher stock prices. This potential move is supported by a bullish backdrop created by a number of indications on the QRVO stock chart, which had not been adversely affected, but the selling pressure that has hit the stock market.