VZ Verizon Communications Analysis May 2016 (W,M,Q)
Created on Saturday, 21 May 2016 11:52
Written by Austin Galt
Verizon Communications Inc (VZ) provides communications, information and entertainment products and services. It is listed on the New York Stock Exchange (NYSE) with a market capitalisation of around $200 billion. Price last traded at $49.66.
Let’s analyse the technicals using the quarterly, monthly and weekly charts.
VZ QUARTERLY CHART
Since the 2008 low at $23.07 price has trended up and made a new swing high although it is still a long way off the all time high set in 1999 at $69.50.
There looks to be a triple top that has just formed and is denoted by the numbers 1, 2 and 3. This triple top is against the trend so is therefore unlikely to be the end of the trend. Once the current correction is over price should then turn back up and crack to new rally highs.
The PSAR indicator is bullish with the dots below price. This indicator went bearish for a couple of quarters before snapping back into bullish mode. This whipsaw action is generally very bullish and indicates price just wasn’t comfortable having a bearish bias for too long.
The Bollinger Bands show price being recently rejected at the upper band and I now favour a move back to the lower band to put in a higher low. Certainly, price should get back to at least test the middle band.
I have drawn a Fibonacci Fan from the 1999 high to 2008 low. This shows price found resistance at the 76.4% angle with the subsequent correction ending right at support from the 61.8% angle. Price has now traded back above the 76.4% angle although I suspect resistance here will give price one final struggle before it sets sail for the 88.6% angle.
The RSI and MACD indicator have both been trending up nicely for over a decade already and the stage is now set for price to make a big whoosh higher.
VZ MONTHLY CHART
The Bollinger Bands show price verging on the middle band while I favour this current move down won’t end until the lower band comes into play.
I have drawn a Fibonacci fan from the 2008 low to 2013 high which was the first top of the triple top formation. This shows the second top at resistance from the 23.6% angle before price went down to find support around the 61.8% angle. The recent top was at resistance from the 38.2% angle and I favour price to head back down to the 61.8% angle where I expect support to show up once again.
The RSI and MACD indicator both look to be guarding time before and price correcting further over the next month or so would not surprise.
VZ WEEKLY CHART
The PSAR indicator is bearish with the dots above price.
The Bollinger Bands show price is back at the lower band where some initial support may come in. However, over the coming weeks I favour price to push much deeper into this lower band.
I have added Fibonacci retracement levels of the move up from recent low to recent high and I am favouring price to clip the 61.8% level at $44.34 to set up the higher low. Let’s see.
The 100 period moving average (red) is above the 200 period moving average (black) indicating an overall bullish position.
The horizontal line denotes the triple top level at $54.49 and once the expected higher low is in place price should charge back up and take out that level.
The RSI showed a new high at the recent price high which is bullish sign for the future.
The MACD indicator is currently bearish so some further downside action could be expected in the coming weeks.
Summing up, after a more substantial pullback in the near term I expect price to fire back up with a solid and sustained move higher.
Disclosure – I have no financial interest in VZ.