TDC Stock: Higher Stock Prices Are Likely to Follow
I am not sure if many investors have noticed, but the bull market in stocks has already resumed after the correction that gripped the market earlier this year. The move toward higher index values is currently being led by small-cap and technology stocks.
So it should not be too surprising that I am focusing on Teradata Corporation (NYSE:TDC) stock because I believe that it is currently primed for a move toward higher stock prices.
Chart courtesy of StockCharts.com
The technical price pattern highlighted on the TDC stock chart is an ascending triangle.
An ascending triangle is created when the price action is characterized by a static high and a sequence of higher lows.
Capturing this pattern was achieved by connecting the peaks and troughs that were created by the price action that characterized this pattern. This process creates two converging trend lines that form this ascending triangle. The upper trend line identifies where resistance resides and the lower trend line identifies where support resides.
These levels of price support and price resistance are very important because once TDC stock either breaks above resistance or falls below support, the pattern will be resolved and the stock is likely to continue in that direction.
On June 15, 2018, Teradata stock broke above resistance, completing the ascending triangle. This event now implies that higher stock prices are likely to follow.
This expected move is likely to be powerful because, by nature, triangle patterns produce powerful breakouts.
The power generated by this pattern is directly related to the convergence of space between price support and price resistance that is created as the pattern develops. This phenomenon causes energy to be built within the pattern that is only released once the pattern is completed.
The breakout that occurred on June 15, 2018 is suggesting that higher Teradata stock prices are now on the horizon. This notion of higher prices is being supported by the indications highlighted on the following TDC stock chart.
Chart courtesy of StockCharts.com
This TDC stock chart highlights a wave structure and an influential momentum indicator that are reinforcing the notion that a bullish move toward higher Teradata stock prices is currently in development.
This wave structure is responsible for laying down the foundation that creates and sustains a bullish trend. This wave structure consists of impulses waves and consolidation waves.
The impulse waves, which are highlighted in green, define the period in a bullish trend when a stock makes a sustained move toward higher prices.
The consolidation waves, which are highlighted in purple, define the period in a bullish trend when a stock corrects and refrains from advancing.
The ascending triangle doubles as a consolidation wave, and its completion implies that an advancing impulse wave is now in development. This is just a fancy way of saying that TDC stock is now likely to make a sustained move toward higher Teradata stock prices.
The development of this impulse wave is being reinforced by the moving average convergence/divergence (MACD) indicator.
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. Bullish momentum implies that a stock is geared toward higher prices, while bearish momentum implies that a stock is geared toward lower prices.
A stock cannot sustain a move in either direction unless the applicable level of momentum is supporting the move. This is why the waves highlighted on the Teradata stock chart have coincided quite remarkably with this indicator.
For instance, the bullish MACD cross in July 2017 correctly suggested that an impulse wave was in development, while a bearish MACD cross in January 2018 correctly suggested that a consolidation wave was in development.
The completion of the ascending triangle has coincided with a bullish MACD cross, which reinforces the notion that a sustained move toward higher stock prices is now in development.
I am bullish on Teradata stock because a number of technical indications are currently suggesting that TDC stock is likely to appreciate. I will maintain this bullish view until there are indications suggesting that a bullish view is no longer warranted.