TRVG Stock: Path of Least Resistance Is Higher
I first came across Trivago NV – ADR (NASDAQ:TRVG) four years ago, booking a trip to Europe, and I loved the experience using its service. I was able to book the hotels I wanted at the lowest price available because it compared a number of web sites, providing me with the best available deals.
I’m sure that investors in Trivago stock have a shared infatuation for the company, because the stock’s performance since inception has been remarkable. Since December 2016, TRVG stock is up 111.25%, and the steps taken to create this stellar performance number are suggesting that this investment can continue to run.
When I am referring to the steps taken, I am talking about the price action that is captured on the Trivago stock chart and the indications that supported this advance.
For anyone who has not had the pleasure of indulging in any of my publications, these factors are all indications contained within the body of knowledge known as technical analysis, which is the method I employ to analyze a potential investment. This method of analysis produces timely indications, which are instrumental in producing an appropriate trading strategy with defined levels of risk.
The first wave in this alternating wave structure on the below stock chart is an impulse wave, highlighted in green. It serves to define the progression in price as the stock stages an advance. This wave usually runs until an internal indication reaches an overbought condition, which caps any further gains.
The following stock chart illustrates the price action that has supported this stellar performance that Trivago stock has experienced.
Chart courtesy of StockCharts.com
This TRVG price chart illustrates that an alternating wave structure has been supporting the price advance.
The second wave of the alternating wave structure is a consolidation wave, highlighted in purple. This wave serves to unwind the overbought conditions that were created during the impulse wave, which creates the necessary conditions for a new impulse wave to develop.
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These alternating waves feed off each other, creating and reinforcing the trend that is now in development. This investment has only been trading for six-and-a-half months, and there have already been four impulse waves and three consolidation waves. Trivago stock seems like it is in a hurry to get somewhere, and that place clearly has higher stock prices. This trend can potentially continue for some time, and there is very little to suggest that the trend is going to end anytime soon.
The current impulse wave has just forged a new all-time high, by which this alternating wave structure has created the quintessential characteristic that defines all bullish trends: higher highs and higher lows. The alternating wave structure maintains order within the trend and, as a result, the trend remains stable and consistent, suggesting that this trend has staying power.
If I were trading TRVG stock, I would specifically look for consolidation waves in order to time when an advance is set to take hold via an impulse wave.
The following Trivago stock chart illustrates a metric that has been instrumental in suggesting when an advance is set to take place.
Chart courtesy of StockCharts.com
The main focus on this TRVG stock chart is the moving average convergence/divergence (MACD) indicator in the lower panel. MACD is an indicator that is used to distinguish whether bullish or bearish momentum is driving the predominance in the stock. It is not a coincidence that the advances and declines have occurred while this indicator was in bullish or bearish alignment.
When TRVG stock staged an advance in February, March, and June, a bullish MACD cross was generated, indicating that the bullish camp had gained momentum. This indication was the precursor suggesting that an advance was about to take hold. The opposite can be said when a bearish cross occurred in February and May, indicating that that the bearish camp had gained the upper hand, and that there was little chance an advance was going to occur.
I would use this indicator in conjunction with the wave structure in order to time entry and exit points in TRVG stock. This strategy will not capture the exact highs and lows, but what it will achieve is that I would be positioned in the direction that the stock is trading in. This is an extremely important aspect because I always find it best to trade in the direction that offers the least amount of resistance.
Bottom Line on Trivago Stock
I am bullish on Trivago stock, and for good reason, too. I like its services, but I like its stock performance even more. My view was generated by analyzing indications on the company’s stock chart, and I will hold a bullish view on TRVG stock as long as these indications continue to suggest that such a view is warranted.