This Pattern Implies Higher Skyworks Solutions Stock Prices

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Credit: iStock.com/anyaberkut

SWKS Stock: Ready to Move Skywards

It brings me great pleasure to be focusing on Skyworks Solutions Inc (NASDAQ: SWKS) stock because I have reason to believe that much higher Skyworks Solutions stock prices are on the horizon. These beliefs are centered around the completion of a very special technical price pattern. This completed pattern carries significant implications suggesting that SWKS stock is now set to move skywards.

Using chart patterns to determine which direction an investment is heading in next is a style of investment analysis known as technical analysis. This method of analysis is based on the notion that stocks have embedded trends, and therefore, historical data can be used to forecast what the future may bring. I know this might sound like a silly notion, but I have seen the results firsthand and when this method is applied correctly, the implications suggested by the indications are quite accurate.

The technical price pattern suggesting that higher Skyworks Solutions stock prices are on the horizon is illustrated on the following stock chart.

Skyworks stocks chart

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Chart courtesy of StockCharts.com

The SWKS stock chart highlights a symmetrical triangle. This pattern is defined by the price action on the stock chart, which contains a series of lower highs and higher lows. This pattern is easily captured using two converging trend lines that were created by connecting the respective levels of lower highs and higher lows. These trend lines serve to define levels of price resistance and price support.

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Triangle patterns are very special patterns because as this pattern develops, it causes a confinement of space between support and resistance. This confinement of space gives this pattern the ability to store energy within it.  This stored energy is finally released when the stock price either breaks above resistance or falls below support.

The size and scope of this pattern is directly related to the reaction that can be expected once it is resolved. So once this pattern was completed on October 30, it began suggesting that a powerful move towards higher prices was in development.

On its own, a symmetrical price pattern very significant. But in this case, the symmetrical triangle is actually just an instrumental piece of a much larger technical price pattern.

This larger and predominant technical price pattern is highlighted on the following Skyworks Solutions stock chart.

Skyworks Solutions Price Chart

Chart courtesy of StockCharts.com

The technical price pattern highlighted on the SWKS stock is a cup and handle pattern. A cup and handle price pattern is identified by its two distinct troughs, where the first trough is much larger than the second. These troughs developed as a result of a significant level of price resistance that prevented the stock prices from advancing.

This level of price resistance sat at $110.00. On October 30, SWKS stock broke above this level of resistance, completing the cup and handle price pattern. The breakout highlighted on this price chart coincides with the breakout highlighted on the symmetrical triangle price chart; the symmetrical triangle is the handle that defines this pattern.

The completion of this pattern is suggesting that a move towards higher SWKS stock prices is now in development, and its implications are reinforced by its size. This technical price pattern is large in stature as it took three years to develop and complete. Therefore, I do not take its implications lightly.

The great thing about this technical price pattern is that aside from just suggesting the next direction that the Skyworks Solutions stock price is going to take, it is also instrumental in suggesting a potential upside target for the move that is in development.

Creating this price objective is as simple as taking the depth of the cup and extrapolating that value above the level of resistance that defined the pattern. The depth of the pattern is $55.00, and resistance stood at $110.00, which therefore creates a potential upside price objective of $165.00 for Skyworks Solutions stock.

Analyst Take: 

I am bullish on the future prospects of Skyworks Solutions stock because the completion of a very large technical price pattern is suggesting that a move towards higher SWKS stock prices is now in development. I will maintain this bullish view until either my price objective is met, or other indications are generated which negate this view.