MasterCard Traces a Playable Zigzag

 | May 21, 2014 | 8:30 AM EDT  | Comments
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Let's talk about MasterCard (MA). I had not looked at this stock in a while, and when I did, I saw something that interested me. It was a two-step or zigzag pattern that had time symmetry.

The two-step pattern setup is illustrated by the zigzag pattern on the daily chart below. The price cluster of support came in at the $66.83-$69.20 area. As for the time symmetry, the first swing down in this pattern lasted 14 trading days. This is very similar to the second swing in the pattern, which lasted 15 trading days. This is what I call time symmetry: when swings in time are similar to other prior swings on a chart. I watch this carefully, as it will alert me to a possible change in trend.

MA Daily
DynamicTrader

We have already seen a nice rally off the April 11 low, where it came in around the 100% time projection cycle of April 10. This low was also made into the key Fibonacci price cluster of support illustrated on the same chart.  The actual low was made on April 11. So I now consider that low pivotal. Since then, we have seen the beginning of a new pattern of higher highs and lows.

You can see where we took out a prior swing high at the $74.82 level, followed by a pullback to a key support decision. We can now look at the $71.07-$72.11 area. This is our current decision.

Bottom line, if the April 11 level is any good in the bigger picture, then we should hold on a pullback to that low. I will define my maximum risk below the $70.22 swing low. If we do resume the rally from above the April 11 low, the upside potential is rather healthy. The two-step pattern points to a possible upside target at the $89.12 area. Let's see if we can hold above this key support in MasterCard and trade accordingly. If the support and the $70.22 low are taken out instead, I will back off the buy side until further notice.

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