SSYS Stock: Looking for a Break Above $31.00
In every bull market, there are always sectors that are laggards, and I am speculating that before this current bull market in the stock market is said and done, this 3D printing stock will make a substantial move toward higher prices.
This inclination toward higher prices is based on the technical price pattern currently being painted on the Stratasys Ltd (NASDAQ: SSYS) stock chart. If this pattern plays out like I believe it will, it will suggest that the bear market that decimated the SSYS stock price has finally run its course and, therefore, a new bull market in Stratasys stock is in development.
The technical price pattern I am currently watching is highlighted on the following stock chart.
Chart courtesy of StockCharts.com
The pattern highlighted on the stock chart is an ascending triangle. These patterns are defined using two trend lines: a horizontal trend line representing resistance and an upward-sloping trend line representing support.
I am particularly fond of triangle patterns because they are particularly powerful patterns. The power generated by these patterns is a result of the convergence of space between support and resistance that is created as this pattern develops. This dynamic causes energy to be stored in the pattern that will finally be 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 this pattern is resolved. The triangle pattern currently being painted on the SSYS stock chart is approaching two years in development, making it a very large pattern. Therefore, a very large reaction can be expected once the pattern is resolved. In order to complete the pattern, the Stratasys stock price needs to either break above $31.00 or fall below $20.00.
On average, triangle patterns are continuation patterns. But on occasion, they act as trend reversals. This is when a powerful pattern becomes really explosive. I have the inclination to believe that a trend reversal is in play, and this notion will be confirmed when SSYS stock breaks above $31.00. Such a development will imply that the bear market in this investment has run its course and that a new bull market is in development.
The reason why I believe that such an outcome is on the horizon is because a very influential momentum indicator is currently in bullish alignment. This momentum indicator I am referring to is highlighted on the following stock chart.
Chart courtesy of StockCharts.com
The focus of the chart above is the moving average convergence/divergence (MACD) indicator. MACD, which is located in the lower panel, is a simple, yet effective, 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 Stratasys stock.
A stock cannot sustain a move toward higher or lower prices without the applicable momentum and the MACD indicator has been instrumental in correctly suggesting whether SSYS stock was set to appreciate or depreciate.
For example, in April 2013, a bullish MACD cross was generated, suggesting that bullish momentum was influencing the trading action in Stratasys stock, and as a result, it created a path of least resistance geared toward higher prices. While the MACD was in bullish alignment, SSYS stock appreciated to the tune of 169.67%.
In April 2014, a bearish MACD cross was generated, suggesting that bearish momentum was influencing the trading action SSYS stock. As a result, the path of least resistance was geared toward lower prices. While this indication was in bearish alignment, SSYS stock deprecated by 79.68%.
These two instances are reason alone not to ignore the implications suggested by this indicator.
In July 2016, the MACD indicator swung into bullish alignment, and it is currently suggesting that higher stock prices are the path of least resistance. As long as it remains in bullish alignment, I will have the inclination to believe that the ascending triangle in development is a potential reversal pattern that will be confirmed once the Stratasys stock price breaks above $31.00.
I am watching the development of the technical price pattern on the Stratasys stock chart because it will determine the next direction this stock is set to take next. I have the inclination to believe that a trend reversal is in play and such a development will be confirmed when the SSYS stock price closes above $31.00, which will imply that higher prices are on the horizon.