RDCM Stock Inches Toward Long-Awaited Breakout

RDCM stock
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RDCM Stock: Anticipating a Breakout

The current market environment is starting to remind me of the market environment that characterized the trading action all of last year. If you cannot recall, 2017 was characterized by low volatility and a methodical move toward higher index values. This trend became so embedded that not even news of a madman testing nuclear weapons could put a dent in its ascent.

Currently, the market is dismissing all implications of a global trade news war. Not even a sell-off from the likes of Facebook, Inc. (NASDAQ:FB) can detour this market. The path of least resistance is clearly geared toward higher index values.

I am focusing on RADCOM Ltd. (NASDAQ:RDCM) stock because I am anticipating that RADCOM stock is on the verge of a sustaining a move toward much higher stock prices.

My beliefs are centered around a number of technical indications suggesting that such an outcome is not only on the horizon, but also a very real possibility.

The first indication I am watching is a technical price pattern, which is highlighted on the following RADCOM stock chart.

Chart courtesy of StockCharts.com

The technical price pattern captured on the RDCM stock chart is a price channel. This technical price pattern is defined by a level of price resistance that resides at $22.00 and a level of price support that resides at $17.00.

Since September 2017, these static levels of support and resistance have prevented RADCOM stock from sustaining a move beyond these price points. Instead, RDCM stock has spent the time oscillating between support and resistance.

This lack of progress will continue until RADCOM stock musters enough energy to break either above resistance or below price support. Once one of these occurs, the stock price is expected to continue proceeding in that direction.

This price channel also doubles as a consolidation wave, and its implications are captured on the following RADCOM stock chart.

Chart courtesy of StockCharts.com

This RDCM stock chart highlights a wave structure consisting of impulse waves and consolidation waves.

The impulse waves, highlighted in green, capture the stage in a bullish trend when a stock makes a sustained move toward higher prices. The consolidation wave, highlighted in purple, captures the stage in a bullish trend when a stock corrects and refrains from advancing.

Impulse waves and consolidation waves work together, creating and sustaining a bullish trend.

As I mentioned earlier, the trading range doubles as a consolidation wave. True to its nature, the stock price has refrained from advancing. Once this wave has run its course, an impulse wave will follow.

I have the inclination to believe that this consolidation wave will resolve itself in a bullish manner and higher prices, via an impulse wave, will follow.

My bullish beliefs are based on the notion that this wave structure has been developing within a well-defined bullish trend.

This bullish trend I speak of is highlighted on the following RADCOM stock chart.

Chart courtesy of StockCharts.com 

This RDCM stock chart illustrates a bullish trend consisting of higher highs and higher lows that has been in development for over four years now.

The higher highs and higher lows have created a stair-step price action that bullish trends are so famous for.

I captured his bullish trend by connecting the troughs that were created by the price action that characterized this trend. The end result was an uptrend line.

This uptrend line is a significant level of price support, and the number of points of contact is a testament to this notion. Using this uptrend line as a tool, I can easily assume that as long as RADCOM stock is trading above the uptrend line, a bull market is in development, and higher stock prices are likely to prevail. This assumption will only become null and void if RDCM stock breaks below the uptrend line.

The consolidation wave is currently developing on top of the uptrend line, which increases the likelihood that the pattern will resolve itself in a bullish manner. A confirmed close above $22.00 would act as a trigger, suggesting that a sustained move toward much higher RDCM stock prices is in development.

Analyst Take

I have the inclination to believe that higher RADCOM stock prices are on the horizon. The reason being that a consolidation wave is currently developing within a bullish trend. Once the stock price closes above $22.00, it will initiate an impulse wave, where higher RDCM stock prices will prevail.