TDOC Stock: This Pattern Speaks Volumes
I am watching Teladoc Inc (NYSE:TDOC) stock because there is a technical price pattern that is being painted on the TDOC stock chart. Once this pattern is complete, it will suggest that substantially higher Teladoc stock prices are on the horizon, which is as good as any reason to watch a stock.
All this investment needs to do is close above $38.00, and it will complete this pattern, and there will be much to get excited about. The good news is that the price action on the stock chart has been constructive in nature, which suggests that the predominant trend is currently bullish. That means TDOC stock is poised for further gains, which increases the odds that resistance at $38.00 will be broken.
The following Teladoc stock chart illustrates the pattern that will be completed once TDOC stock closed above $38.00.
Chart courtesy of StockCharts.com
The technical price pattern highlighted on the Teladoc stock chart is a cup and handle.
The pattern contains two distinct troughs that are created by a significant level of resistance that prevents the stock price from advancing. In order to complete this pattern, which will suggest that a move toward higher prices is in development, the stock price needs to close above this significant level of price resistance that resides at $38.00.
What makes this pattern special is its size. This cup and handle pattern has been in development since the company first began trading on public exchanges in June 2015, which is more than three years ago. A pattern of this size is expected to produce a significant move once it is resolved.
The great thing about this technical price pattern is that, when it is finally completed, not only will it suggest that higher prices are on the horizon, it also produces a potential price objective that can be applied to a trading strategy.
This price objective is obtained by taking the depth of the cup and extrapolating that value above the significant level of resistance that defined it. This produces a potential price objective of $65.00.
As I mentioned earlier, the price action has been constructive in nature, which increases the odds that resistance will be broken. This constructive price action is illustrated on the following Teladoc stock chart.
Chart courtesy of StockCharts.com
This TDOC stock chart illustrates that constructive price action has been responsible for the bullish trend that began in March 2016.
Constructive price action is an alternating wave structure that contains two predominant waves: an impulse wave and a consolidation wave.
The impulse waves, which are highlighted in green in the stock chart, serve to define the period in a bullish trend when the stock price makes a sustained advance toward higher prices.
The consolidation waves, which are highlighted in purple on the stock chart, serve to define the period in a bullish trend when the stock price corrects and refrains from advancing. Consolidation waves are very important because they restore health to a trend by unwinding any overbought conditions that have been created. This creates the necessary environment so a new advancing impulse wave can follow.
TDOC stock is currently within the confines of a consolidation wave, which means that the price is correcting. In order to suggest that new impulse waves are in development, the stock price needs to exit the consolidation wave in an upward direction. This will likely coincide with a bullish indication from the moving average convergence/divergence (MACD) indicator located in the lower panel of the stock chart.
MACD is a momentum indicator that uses the crossing of a signal line to distinguish whether bullish or bearish momentum is influencing the price action in a stock. This is an extremely significant indicator because, without bullish momentum, a sustained move toward higher prices cannot occur.
The TDOC stock chart is a great example, because, every time an impulse wave was in development, the MACD was in bullish alignment.
The MACD signal lines are currently converging, and the completion of the consolidation wave will likely coincide with the bullish MACD cross. These events will imply that higher Teladoc stock prices are in development, which will complete the cup and handle pattern.
The completion of the cup and handle pattern on the Teladoc stock chart will suggest that much higher stock prices are likely to follow. In order to complete this pattern, and confirm that this investment is poised for higher prices, TDOC stock needs to close above $38.00.