Bullish breakout on a good volume for Activision Blizzard (ATVI)
By looking at the daily chart, we can see the strong bullish rally that has occurred in the period March-August taking the price from the March 17th lows of around $51 to the $87 all-time highs in the beginning of August. Since then, we have seen a very common trend continuation pattern consisting of an initial strong volatile correction, which is then followed by a sideways price action with a slight downward corrective bias. This creates a diagonal downward sloping resistance line following the corrective movement, which if broken to the upside signals the resumption of the long-term trend. Once again this famous chart pattern proved to be accurate in the prediction of the next big move in the market as the $80 resistance was broken to the upside in the beginning of December. What followed was an incredible and rapid rise of the stock all the way up to the $93 mark, thus recording a new all-time high reading. The stock was sitting at the $89 mark at the end of last week after being initially rejected by the $93 highs. However, we have seen a strong push higher through the former all-time highs as the stock is currently sitting at $95 per share.
We believe that the initial short-term corrective movement was provoked by nothing else but a short-term profit taking interest in the market. The prior all-time highs back from the August bull-run are providing immediate support around the $88 level. While we believe that the stock market in the US is currently holding a lot of intrinsic risks surrounding COVID-19, the transition of power in the White House, the economic recovery etc. and that we could be in for a sideways and choppy price action in the coming weeks, which in turn could affect a lot of the stocks negatively, we see that the winners will most likely continue to win. We remain bullish on the ATVI stock and believe that all these profit-taking corrections are giving us great opportunities to buy the stock at a good discount, which would in turn give us a chance to maximize our profits to the upside. Moreover, some of the technical indicators that we are monitoring closely (50 DMA, 100 DMA, Bollinger Bands, RSI etc.) have already retraced from extreme overbought conditions are currently trying to build up some momentum for another push higher, which means that the uptrend might be resuming very soon.
The daily chart shows that the price found lots of buying interest at the first key horizontal support line around $88, which is actually further supported by the strong dynamic 20 DMA support sitting at $89. Considering the fact that new all-time highs were set recently we should see the price staying above the prior ATH and treat it as a support in order for the strong rally to continue. Furthermore, we have the critical 50 DMA and 100 DMA currently lying at the $83 and $85 marks, which will definitely provide remarkable technical support for the price in case $89 gives away. We expect lots of buying pressure to occur around the above-mentioned support levels, which in turn will end up sending the price back towards the round number at $100. Our extended Take Profit level will be placed at $108.50
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We believe that the initial short-term corrective movement was provoked by nothing else but a short-term profit taking interest in the market. The prior all-time highs back from the August bull-run are providing immediate support around the $88 level. While we believe that the stock market in the US is currently holding a lot of intrinsic risks surrounding COVID-19, the transition of power in the White House, the economic recovery etc. and that we could be in for a sideways and choppy price action in the coming weeks, which in turn could affect a lot of the stocks negatively, we see that the winners will most likely continue to win. We remain bullish on the ATVI stock and believe that all these profit-taking corrections are giving us great opportunities to buy the stock at a good discount, which would in turn give us a chance to maximize our profits to the upside. Moreover, some of the technical indicators that we are monitoring closely (50 DMA, 100 DMA, Bollinger Bands, RSI etc.) have already retraced from extreme overbought conditions are currently trying to build up some momentum for another push higher, which means that the uptrend might be resuming very soon.
The daily chart shows that the price found lots of buying interest at the first key horizontal support line around $88, which is actually further supported by the strong dynamic 20 DMA support sitting at $89. Considering the fact that new all-time highs were set recently we should see the price staying above the prior ATH and treat it as a support in order for the strong rally to continue. Furthermore, we have the critical 50 DMA and 100 DMA currently lying at the $83 and $85 marks, which will definitely provide remarkable technical support for the price in case $89 gives away. We expect lots of buying pressure to occur around the above-mentioned support levels, which in turn will end up sending the price back towards the round number at $100. Our extended Take Profit level will be placed at $108.50
Follow us @dowexperts