Learn the trade here. Make it on tradeMONSTER

Options Trading News

July 29, 2011  Fri 12:21 PM CT

PCLN: SEE CHART GET CHAIN FIND STRATEGIES
Ahead of Priceline.com's earnings report on Thursday, there is a potential bullish price pattern on its weekly chart.

On the six-month weekly chart below, I have highlighted a potential bullish "flag" with sloping orange lines. Those lines define the lower and upper bounds of the current bearish price channel. Flag formations are short-term counter-trend consolidation patterns.

Priceline has been digesting the gains made off the June lows, which saw the stock rise by $100 since that time. Shares of the online travel service have since sold off, down to support near the 10-week moving average, last at $511.63.

As it happens, that moving average defines the low of the channel. The pattern would be voided on a sustained move below that level.

If earnings news is good, the trigger level to watch for the flag is at $542.50. The potential upside for the pattern, if it were to remain active and complete, would be to the $625 area.

One very important aspect to the chart to keep in mind is a potential double top. The current peak was well below the previous high at the $560 area, giving the chart's most recent price action since the April low a classic "M" shape. If earnings or outlook are weak, that formation might well complete down to the midpoint of the "M," as the June low of $450.

PCLN is up 2.87 percent to $537.29 in afternoon trading.

PCLN

(Chart courtesy of tradeMONSTER)
Share this article with your friends


TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Education & Strategy

When cash is king (of hedging)

Whether your trades are winning or losing, it can be tempting to add to your positions. But in either case,...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER