QCOM Stock Is Primed for a Move Toward Much Higher Prices

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QCOM Stock: All Eyes Are on This Level of Price Resistance

I am focusing on QUALCOMM, Inc. (NASDAQ:QCOM) stock because I believe the stock is on the verge of breaking out toward much higher prices. The reason why I have this belief is because QCOM stock is close to completing an extremely large technical price pattern. When this pattern is completed, it will imply that much higher stock prices are likely to follow.

This extremely large technical price pattern is highlighted on the following Qualcomm stock chart.

Chart courtesy of StockCharts.com

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The technical price pattern highlighted on the QCOM stock chart is 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. The significant level of price resistance highlighted on the Qualcomm stock chart resides at $75.00. It was first established in January 2000, at the peak of the dotcom bubble.

The stock’s inability to move beyond this level of price resistance has resulted in the creation of two distinct troughs. The first trough is much larger than the second. It is these troughs that create and characterize a cup and handle price pattern.

In order to complete the price pattern, QCOM stock needs to break above price resistance. Once this event occurs, a powerful move toward much higher prices is expected to follow.

The reason why a powerful move is expected to follow is because the pattern in development is extremely large. The size and scope of a price pattern is directly related to the size of the move that follows. The pattern on the QCOM stock chart has been in development for almost 19 years, making it among the largest patterns I have ever come across.

I am actually anticipating a breakout above price resistance because a very influential momentum indicator has just swung into bullish alignment, suggesting that Qualcomm stock is now likely to appreciate.

The momentum indicator I am referring to is highlighted on the following QCOM stock chart.

Chart courtesy of StockCharts.com

This Qualcomm stock chart highlights the moving average convergence/divergence (MACD) indicator.

MACD is a very influential momentum indicator that distinguishes whether bullish or bearish momentum is influencing the price action in a stock. This is important and pertinent information because a stock cannot sustain a move in either direction unless the applicable level of momentum is supporting it.

For instance, bullish momentum implies that a stock is geared toward higher prices. Bearish momentum implies that a stock is geared toward lower prices.

The example captured on the stock chart illustrates that when the MACD signal lines are in bullish alignment, the stock price has a tendency to sustain a move toward higher values. When the signal lines are in bearish alignment, the stock has a propensity to correct toward lower values.

A bullish MACD signal is in the process of being generated, which will suggest that Qualcomm stock is geared toward higher prices. This signal will significantly increase the odds that resistance will fall in the not-too-distant future.

Once these coinciding events occur, I firmly believe that a sustained move toward higher stock prices will follow.

The reason why is that the cup and handle price pattern is an integral part of a wave structure known to create and sustain bullish trends.

This wave structure I am referring to is highlighted on the following Qualcomm stock chart.

Chart courtesy of StockCharts.com

This QCOM stock chart highlights an alternating wave structure consisting of impulse waves and consolidation waves.

The wave highlighted in green is an impulse wave. Impulse waves capture the stage in a bullish trend when a stock stages a progressive move toward higher prices. The wave highlighted in purple is a consolidation wave. Consolidation waves capture the stage in a bullish trend when a stock corrects.

These waves feed off each other, creating the necessary conditions so a bullish trend can flourish.

The cup and handle price pattern doubles as a consolidation wave. Once the price pattern is completed, it will imply that a sustained move toward higher QCOM stock prices, via an impulse wave, is likely to follow.

Analyst Take

I am watching a technical price pattern that has been developing on the Qualcomm stock chart. I believe that if QCOM stock can close above price resistance at $75.00, it will complete the pattern. As a result, much higher stock prices will follow.