Near-Term Correction for T-Mobile US

 | Feb 14, 2017 | 11:47 AM EST
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The rally in T-Mobile US (TMUS) could slow in the near-term. TMUS has rallied strongly in the past year but a flattening On-Balance-Volume (OBV) line and a bearish divergence from the daily Moving Average Convergence Divergence (MACD) oscillator suggest prices could take a rest before climbing further.

In this daily chart of TMUS, below, we can see that prices tested the rising 50-day moving average line in January. The 200-day moving average line is rising, but it could be said that prices are too far above this indicator. Sometimes when you get too far away from a moving average there is a movement back towards the average.

The On-Balance-Volume (OBV) line has been rising for much of the past year, but the line has flattened a bit since December. The Moving Average Convergence Divergence (MACD) oscillator is in a liquidate longs setup after a lower high than what we saw in early December. This bearish divergence between the higher prices but lower indicator readings suggests that prices could correct in the near term.

In this three-year weekly chart of TMUS, above, we can see that prices are above the rising 40-week moving average line. The OBV line on this time frame is still pointed up and the MACD oscillator is starting to narrow towards a liquidate longs sell signal.

In this Point-and-Figure chart, above, we can see that prices are in a down column of Os, but also that there is upside targets when we get a fresh breakout.

Bottom line: The longer-term trend remains bullish, but TMUS is likely to have a correction in the near-term. I would raise sell stops to a close below $56.

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