QCOM Stock: Geared Up and Ready
The sell-off that gripped QUALCOMM, Inc. (NASDAQ:QCOM) stock in 2014, finally bottomed in February 2016, after 46% of the company’s value was wiped away. Since those lows were created, Qualcomm stock has trended higher in such an orderly manner that suggests that this bullish trend has staying power.
For those not familiar with my work, I use technical analysis as the basis of my analysis. Technical analysis uses past volume and price data to discern trends and forecast future prices.
The reason why I chose to focus on QCOM stock at this juncture is because it is presently sitting on an important level of support and in order for this orderly bullish trend to continue, price must appreciate to remain above this level. From a risk/reward perspective, this is where traders like to enter positions because of their ability use tight stop losses that define their risk.
The following Qualcomm stock chart illustrates the orderly trend that has supported the QCOM stock price.
Chart courtesy of StockCharts.com
Shortly after the lows were made in February 2016, QCOM stock began to trade within the confines of an ascending channel. An ascending channel contains two parallel trend lines that define the upper resistance and lower support. These channels allow the price to oscillate between support and resistance for as long time permits. As long as Qualcomm stock remains within the confines of the channel and the price action remains orderly, this trend can persist.
This bullish trend has been supported by bullish momentum and the golden cross that was generated in May confirms this. A golden cross is a bullish signal that is produced when a 50-day moving average, highlighted in blue, crosses above a 200-day moving average, highlighted in red. This signal is used to confirm that a bull market has already begun, and it is not uncommon for price to accelerate to the upside after such a signal is generated.
Qualcomm stock is now resting right on support that is outlined by the ascending channel. If this bullish trend that began in February 2016 is going to continue, it is imperative that QCOM stock remain above it.
The price action above this level of support suggests that a bullish outcome is likely, and the following Qualcomm stock chart illustrates this.
Chart courtesy of StockCharts.com
Right above support outlined by the ascending channel, QCOM stock is setting up a rectangle consolidation pattern. The pattern consists of two horizontal parallel trend lines that define support and resistance. These trend lines mark the tops and bottoms of the trading range.
This consolidation pattern could act as both a continuation pattern or a reversal pattern.
If QCOM stock exits this consolidation pattern to the upside, it would make it a continuation pattern. The price objective of a bullish resolution of this pattern would be outlined by the resistance that makes up the ascending channel.
If QCOM stock exits this pattern to the downside, it would make it a reversal pattern. This price action would also break below support outlined by resistance that makes up the ascending channel and would suggest that the bullish run that began off the February 2016 lows had concluded.
At this moment, I can only speculate the outcome. Many of my indicators remain bullish, and therefore it is my belief that Qualcomm stock will exit this pattern to the upside, and a surge in price will ensue.
Bottom Line on QCOM Stock
Qualcomm stock is sitting right on support and a resolution to the consolidation pattern will dictate whether or not the the bullish trend in QCOM stock will continue.