While breaking down each of the 30 Dow components earlier this week, I noticed something interesting taking place in shares Visa. Prices are currently right in the middle of a giant symmetrical triangle that’s been taking shape throughout 2014. The key here is that with prices currently above upward sloping 50 and 200 day moving averages, the bigger overall trend here is clearly up. Therefore, the resolution out of this consolidation is likely to be to the upside.
Here is a daily bar chart of $V in the middle of this pattern well-defined by these two converging trendlines. As prices approach the apex of this symmetrical triangle, something’s gotta give. A resolution is quickly approaching:
From a risk management perspective, if prices break below the June lows near $207, then this bullish thesis is likely incorrect and a more bearish stance would be more appropriate. Although I believe this is the lower probability outcome, keeping an open mind to all possibilities is something that we pride ourselves on.
I would also argue that a rally above the July highs near $225 would confirm a breakout and bullish resolution to this pattern that would signal much higher prices in the near future. I think this is the higher probability going forward based on the evidence above along with momentum readings and longer-term timeframe analysis that our Eagle Bay Solutions Members receive on a weekly basis.