Veeva Systems Stock Is Primed for Further Gains

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VEEV Stock: Targeting $100.00

The markets are trying to come to grips with the notion of a trade war, and with it, volatility remains elevated. High volatility is why the markets continue to gyrate wildly in both directions. This environment is fruitful for traders who thrive on volatility, but at the same time, it is causing angst for long-term investors. The markets are clearly under duress as emotions are running high. I continue to believe that the markets are still geared toward higher prices, and until I change my tune, I will continue to look for investments that are primed for higher prices.

One such investment is Veeva Systems Inc (NYSE:VEEV) stock. This is not my first time covering Veeva Systems stock; I stumbled upon this investment in April 2017 and published a report titled “With No Resistance in Sight, Veeva Stock Is Set to Appreciate.” In that report, I listed a number of technical developments that were suggesting VEEV stock prices were set to appreciate, and that is exactly what transpired.

I am currently focusing on Veeva Systems stock because there are new developments, in the form of a completed technical price pattern, suggesting that higher VEEV stock prices are once again likely.

This completed technical price pattern is highlighted on the following Veeva Systems stock chart.

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Chart courtesy of StockCharts.com

The completed technical price pattern highlighted on the VEEV stock chart is a descending channel.

A descending channel is a bearish pattern characterized by price action that contains a series of lower lows and lower highs. Connecting this series of lower lows and lower highs produces two parallel downward-sloping trend lines, which define the descending channel as well as respective levels of price support and price resistance.

These patterns operate quite simply. As long as the stock price oscillates in between support and resistance, lower prices will prevail. Only when the stock falls below support or breaks above resistance is the pattern finally resolved.

On February 28, 2018, Veeva Systems stock broke above the trend line that represented price resistance, completing the descending channel, suggesting that higher VEEV stock prices were on the horizon.

This notion of higher Veeva Systems stock prices was already being suggested by the moving average convergence/divergence (MACD) indicator.

MACD is a simple and effective trend-following momentum indicator, where signal-line crossings are used to determine whether bullish or bearish momentum is influencing the price action in a stock. This is a powerful indicator because a stock cannot sustain a move toward higher or lower prices without the applicable momentum supporting it.

A bearish MACD cross was generated in July 2017, and VEEV stock refrained from advancing as it oscillated with the descending channel. It was not until February 2018 that a bullish MACD cross was generated and the descending channel was resolved in a bullish manner. Higher stock prices have since prevailed.

The resolution of the descending channel is bullish, but in the context of its predominantly bullish trend, the ramifications are magnified.

The following stock chart illustrates the role that the descending channel plays within the context of Veeva Systems stock’s predominantly bullish trend.

Chart courtesy of StockCharts.com

The VEEV stock chart has been annotated in order to highlight the constructive price action that has been responsible for creating a bullish trend.

Constructive price action consists of impulse waves and consolidation waves.

The green impulse waves are advancing in nature and they define the stage in a bullish trend where a stock makes a sustained and uninterrupted move toward higher prices.

The purple consolidation wave is corrective in nature and it defines the stage in a bullish trend when the stock price corrects and refrains from staging an advance. Corrective price action has a very important function where it unwinds overbought conditions that were created during the impulse wave that preceded it. This restores health to a bullish trend, creating the necessary environment so a new impulse wave can follow.

The descending channel is a consolidation wave within this wave structure, and the bullish resolution of this pattern suggests that an advancing impulse wave is now in development.

Price Objective

Aside from just suggesting that higher prices are in development, the wave structure can be used to generate a potential price objective for the impulse wave that is currently in development. The theory behind this wave structure suggests that consolidation waves act like midpoints in a bullish trend and, therefore, the impulse wave that follows will likely mirror the impulse wave that preceded it.

Applying this notion to the wave structure on the VEEV stock chart suggests that the current impulse wave has the potential to reach $100.00.

Analyst Take

I believe that much higher Veeva Systems stock prices are currently in development. My beliefs were generated using the indications that were generated on the VEEV stock chart, and as long as they remain in bullish alignment, I will maintain my bullish view on this investment.