Despite a sharp pullback over the past two trading day, Visa (NYSE:V) stock remains higher by more than 30% year-to-date. While in the bigger picture V stock is certainly nearing overbought readings, in the near to intermediate term, the stock is trending higher. And, at the bottom end of the trading range here, the stock is ripe for a bounce trade.
In the world of charts and technical analysis, successful traders know that a near-term view on a stock has nearly nothing to do with an intermediate-term or longer-term chart.
In other words, while we always want to gain perspective on any given trade setup through the lens of different time frames, a stock at any given point is usually not a “buy” or a “sell” in all time frames simultaneously.
V Stock Charts
To wit, looking at the multi-year chart of Visa stock we see that over time it has continuously steepened its slope. Year-to-date the stock has also begun to notably narrow its trading range while leaving most momentum oscillators (bottom of chart) in serious overbought readings. While this is concerning in the longer-term, and it could thus lead to a serious mean-reversion move lower over time, in the near term, the trend in Visa stock continues.
Visa stock daily chart
On the daily chart we see that V stock, for the most part thus far in 2019, has pushed higher in a well-defined range as marked by the two purple parallels. The bearish reversal over the past two trading days, which measures nearly -5.50% so far, has pulled the stock down to the lower end of the trading range. Furthermore, this lower boundary also roughly coincides with the blue 100-day simple moving average as further potential solidification of support.
While I am one to respect bearish reversals such as the ones we witnessed in V stock so far this week, I am also wanting to respect the year-to-date up-trend.
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Source: Investor Place