Visa. Examining potential downside risks. VAssessment:
Neutral Hold- Going Long.
Market Climate:
Bull controlled, increasing volatility.
Industry:
Financial Services
Indicators:
None
Patterns Identified:
Harmonic ABCD
Macro Broadening Wedge
Visa has seen steadily rising bullish accumulation since first breaking out in December 2012. Since then, the security has experienced a change in price of roughly 612%. The security has been methodically traded between two ranges demonstrated through the broadening wedge depiction. More importantly, the stock has broken beyond the major resistance line of the broadening wedge, pulled back, and continued a break out extension symmetric to the pole of the wedge structure.
However, with mid-2018 to late 2019 thus far facing significant increases in overall volatility by a variety of factors, the security is for the short-term from a technical standpoint demonstrating an increase of inherent risk to visa bulls. With echoing discussions of an impending recession, international trade tension, the effect of the Fed on the US economy, and the slowing of corporate earnings visa may be in a tight position that could affect the value of the underlying asset. Take note of the harmonic ABCD.
The ABCD demonstrates a breakout structure from the stock’s primary macro trend. An ABCD harmonic cresting either at or breaking beyond major resistance typically indicates the potential for change in trend or direction. Although the overall security remains controlled by bullish accumulation, visa bulls may begin to sit sidelined waiting for a more defined consolidation structure.
There is also room for down trending to occur back to the previous macro support within the wedge. Similarly, a pullback to the broken beyond resistance line now became support, displays significant area for the stock to decline before a more attractive entry becomes available. Long-term investors who have taken a long approach should consider reducing on other lagging securities while similarly waiting for an activity of greater confirmation. Keep in mind, that a short-term devaluation in the overall underlying asset does not necessarily signify a reversal of control from bulls to bears.
