TMUS Stock: Triple-Digit Potential?
T-Mobile US Inc (NASDAQ:TMUS) provides mobile communications and services to approximately 65.5 million customers. The mobile segment of the economy continues to experience exponential growth, as consumer appetite for data seems insatiable. People continue to increase the amount of money they are willing to fork over for such a necessity, as the smartphone revolution has transformed our mobile telephones into handheld data-consuming media devices.
TMUS stock is at multi-year highs, as investors have benefited handsomely from the shift in consumer behavior.
The most compelling factor about T-Mobile stock is its price chart. The picture it provides is like a looking-glass into the past, and this tool can be used as predictor of future stock prices, according to my beliefs. My views are based on the the study of technical analysis, and this is the knowledge base I use to analyze applicable investments.
I chose to focus on TMUS stock because its chart is impeccable, and a lot can be learned from it.
The following TMobile stock chart illustrates how precisely the price has adhered to technical price levels.
Chart courtesy of StockCharts.com
The TMUS stock chart above can be placed directly into a textbook. The patterns are clear and defined, and the price action is pristine.
It took approximately five years for the double bottom reversal pattern to form in the T-Mobile stock chart. These types of trend reversal patterns appear at the conclusion of a downtrend. The pattern is marked by two consecutive bottoms, separated by a peak in between. The double bottom pattern was confirmed when TMUS stock closed above the peak that separated the two bottoms.
The TMobile stock price then went on to confirm this reversal pattern by testing this level from above. This backtest, which solidified the previous level of resistance that was marked by the peak, is now a level of price support.
This backtest was short-lived, as T-Mobile stock quickly reversed and headed higher. There is only one level of resistance left, and this level is the all-time high that was created in 2007 shortly after TMUS stock started trading publicly.
I do not expect this level to be breached on the first attempt but, when this level is finally broken, I could argue that TMobile stock could test the triple-digit level. This is not a typo, and it explains how significant this level is.
The following TMUS stock chart illustrates the trend that is currently in play.
Chart courtesy of StockCharts.com
The price action on the above TMobile stock chart is just as pristine as the previous chart I provided.
The uptrend line, highlighted in blue, is the trend that defines the recent surge higher in price. This trend line acts as a level of support and defines risk in one convenient indicator. As long as TMUS stock is trading above the trend line, higher prices will prevail, and a test—and a potential breakout of resistance—is a possible objective. A break below this level would be reason enough to withdraw any further bullish objectives, as such an event would suggest a trend reversal.
The good news is that the price action above this trend line remains bullish. The trend lines highlighted in purple in the chart above represent levels of price congestion known as consolidation waves. TMobile stock has effectively resolved each level of congestion with upside breakouts. The price has once again broken out higher, and a test of the all-time high at $53.80 is likely. The only remaining question is: when the level will be broken?
The Bottom Line on T-Mobile Stock
I am bullish on TMUS stock, but I would refrain from entering a position until the the level of resistance is decidedly broken. The trend is still higher, but I do not believe that the level will be broken on the first attempt. The risk v. reward potential of TMobile stock increases significantly upon a successful breakout.