Greg Harmon of Dragonfly Capital explains how several charts of Priceline may be pointing to higher highs for the stock.
Based on its latest TV commercial with a crashing bus, it seems that William Shatner was a weight on Priceline’s (PCLN) stock price. No sooner does he die in a fiery bus crash than the stock heads higher and breaks a consolidation zone. Lets take a look.
Here is a daily chart:
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PCLN had been in that consolidation channel for nearly a year between 440 and 550 before breaking above it last week. Long enough that all of the simple moving averages (SMA) were flat.
As it rides higher, the 50-day SMA has crossed up through the 200-day SMA, the Golden Cross, and the relative strength index (RSI) is bullish if a tad bit overbought, but not excessive. The Moving Average Convergence Divergence (MACD) indicator is also positive, adding to the bullish sentiment.
The first target for a break over this channel is to 660. It will likely not happen in a straight line, though. The weekly chart shows the true bullish picture, that consolidation zone, after a run higher from 175, is also a bull flag and the break out higher triggers a measured move to 815.
Here is a longer-term daily chart:
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On this timeframe, the bottoming and now rise of the RSI is apparent. It is bullish and trending higher. The MACD is also building.
The volume is increasing on a relative basis on this entire leg higher, although still below that experienced last year. But backing out to the monthly view gives an even more bullish perspective.
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If this stock can get over the 61.8% Fibonacci retracement of the major move lower from 1999 into 2000, then there is little in the way of a full retrace up to 990. That is a long way from the current 584.
If you are a short-term trader, be aware that it reports earnings on February 27, next Monday.
Greg Harmon can be found at Dragonfly Capital.
