V Stock Continues to Defy Gravity by Forging New All-Times Highs
The first quarter was plagued by wild market swings. These swings were fueled by an elevated volatility index, creating a market that was geared toward lower prices. This is why the markets have been in the grips of a correction ever since.
In every market environment, there are certain stocks that have a characteristic that we as investors could only wish every stock in our portfolio contained. I am focusing on Visa Inc (NYSE:V) stock because it contains this characteristic, which has been responsible for taking Visa stock from a low of $9.93 in January 2009 to where it currently stands today at $130.24. If you’re wondering, this translates into a 1,211.58% return in a little over eight years.
It is a lot easier displaying this characteristic, rather than describing it, which is why I have highlighted this characteristic on the following V stock chart.
Chart courtesy of StockCharts.com
The characteristic I am referring to is price action that contains a series of higher highs and higher lows, which creates a staircase pattern. This price action is the quintessential characteristic that defines all bullish trends.
I captured the bullish trend on the V stock chart using a simple uptrend line, which is highlighted in blue. This uptrend line was created by simply connecting the series of higher lows that characterized the bullish trend.
This bullish trend on the Visa stock chart is extremely significant. It has been in development since 2009, which means it is a little over eight years in the making. Over this time frame, this uptrend line has been tested vigorously a number of times. Each and every time, it has acted like an impenetrable force, and higher stock prices have always prevailed. The inability to trade below the uptrend line is a testament to its significance.
Using the uptrend line as a tool is as simple as it was to create. As long as Visa stock is trading above it, one can only assume that the bullish trend that began in 2009 is intact and, therefore, higher V stock prices are still in development.
On the other hand, breaking below this uptrend line would suggest that the bullish trend that began in 2009, following the financial crises, has finally run its course and lower stock prices are likely to prevail.
Luckily, a further test of the uptrend line is going to have to wait because Visa stock has just completed a technical price pattern implying that the trend toward higher prices is likely to continue.
This completed technical price pattern is highlighted on the following Visa stock chart.
Chart courtesy of StockCharts.com
The completed technical price pattern highlighted on the V stock chart is a symmetrical triangle pattern. Symmetrical triangles such as this one develop when the price action is characterized by a sequence containing a series of lower highs and higher lows.
I captured this symmetrical triangle by connecting the sequence of higher lows and lower highs. This process resulted in the creation of two converging trend lines. These trend lines define significant levels of price support and price resistance. Only when one of these levels are breached is the pattern finally resolved.
The converging nature of these trend lines is why triangle patterns are particularly powerful patterns. The power from these patterns is created because, as it develops, traders position themselves on either side of support and resistance in anticipation of a resolution. This causes energy to build within the pattern as it develops. This stored energy is finally released when the stock price either breaks above resistance or falls below support, and a powerful move usually follows.
On April 26, 2018, Visa stock exited the symmetrical triangle by breaking out above resistance. This breakout has been followed by higher prices and reinforces the notion that V stock is poised for further gains.
Visa stock has been in a rocketship ride toward higher stock prices since it put in a long-standing bottom following the conclusion of the financial crisis. This move toward higher prices has been supported by a simple technical tool known as an uptrend line, and as long as V stock continues to trade above it, higher stock prices will prevail.