TXN Stock: Precision at Its Best
Texas Instruments Incorporated (NASDAQ:TXN) stock has been a great stock to watch. The progression in TXN stock off the 2008 lows, which were created following the financial crisis, has been precise and a pleasure to follow. Texas Instruments stock abides by technical rules and it consistently sets up a technical pattern before it makes its next advancement in its stock price. At this moment, there is a technical price pattern in development that will dictate which way this investment will move next.
Before I delve into my analysis, it is worth noting that my views on this investment have been generated by analyzing the price action and indications that occur on the TXN stock chart. This method of investment analysis is known as technical analysis, and I have been crafting my skills in this method for nearly two decades. Technical analysis is based on the notion that historical price and volume data can be used to project the future direction of price. This method has served me extremely well, and I’m sure my many followers can attest to the value this method of analysis can provide.
The technical price pattern that is being painted on the TXN stock chart is an ascending channel. This simple technical price pattern is created using two parallel upward-sloping trend lines, where the upper trend line acts as a level of resistance and the lower trend line acts as a level of support. These patterns act as levels of indecision, where bulls and bears fight for a foothold as to which direction the stock is set to take next.
The following Texas Instruments stock chart illustrates the current technical price pattern that is acting to set up the next move in this investment.
Chart courtesy of StockCharts.com
This battle is also where any overbought conditions that were created in the previous advance are unwound, so the proper conditions are available for the next directional move to occur. This is accomplished by the stock price oscillating between these defined levels of support and resistance.
A break above resistance would suggest that TXN stock was set for another leg higher, while a break below support would suggest that a larger correction was set to ensue. This channel is occurring within a much longer-term bullish trend, and on average, patterns such as this one have been known to act as continuation patterns, suggesting that odds favor a break above resistance.
The following Texas Instruments stock chart illustrates the longer-term trend that is supporting a bullish resolution of the ascending channel.
Chart courtesy of StockCharts.com
This TXN clearly shows that a defined bullish trend began off the panic lows in 2008, in the midst of the financial crisis. This trend contains the quintessential characteristic that defines all bullish trends: a series of higher highs and higher lows. This quintessential characteristic creates a stair-step pattern that serves to advance the stock price from the lower left to the upper right of the price chart.
This bullish trend is effectively captured using a simple uptrend line, created by connecting the significant troughs on the price chart. This uptrend line not only defines the predominant trend, but it also serves to define risk. This is accomplished simply by assuming that as long as TXN stock is trading above this uptrend line, the predominant trend will remain to the upside and therefore, the progression towards higher stock prices should be expected to continue.
If, for some reason, Texas Instruments stock trades below this uptrend line, I will have all the reason I need to exit this investment because it will serve to suggest that the predominant bullish trend has finally concluded and a larger correction is set to ensue.
The moving average convergence/divergence (MACD) indicator is in bullish alignment at the moment, supporting this current advance. MACD is a momentum indicator that captures a change in momentum by using the crossings of signal lines. This indicator has been extremely effective in suggesting that this investment was set to advance.
The most recent bullish cross was generated in May 2016, and it served to suggest that bullish momentum is governing the predominant direction of this investment, creating an environment where the path of least resistance is geared towards higher stock prices. While this indication is in bullish alignment, it is supporting a bullish resolution of the ascending channel that is currently in development.
Bottom Line on Texas Instruments Stock
There is a technical price pattern on the Texas Instruments stock chart that will dictate the next direction this investment will take. The longer-term trend on the TXN stock chart is bullish, and it is being supported by a bullish MACD signal. These bullish indications increase the odds that the technical price pattern in development will resolve itself in a bullish manner.