Activision Needs a Blizzard of Volume to Trust in Higher Price Targets

 | Jul 13, 2017 | 9:42 AM EDT
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Activision Blizzard (ATVI) soared more than 5% to the upside yesterday. Impressive. It almost made a new high. Volume was okay, but not what I would call "table pounding" or escape velocity. Prices look like they will make a new high today, so let's check out the latest charts and our favorite set of indicators.

In this daily bar chart of ATVI, below, we can see that prices made two pushes down to test the $56 level/zone and the stock has pushed up three times into the $60-$62 zone. The price action since early June might be called a box pattern, or a variation of a rectangle formation. A breakout to the upside would mean we can take the height of the pattern, or roughly $5, and add it to the breakout around $61 for a $66-$67 price target. Prices are above the rising 50-day and the rising 200-day moving average lines.

Volume, as we noted above, is not exciting. The volume pattern below the price chart is neutral. The daily On-Balance-Volume (OBV) line has been weak since early June and right now does not confirm the rally. The trend-following Moving Average Convergence Divergence (MACD) oscillator has narrowed towards a fresh go-long signal.

In this weekly chart of ATVI, below, we can see that prices are above the rising 40-week moving average line. The weekly OBV line has been rising since December, but it has yet to make a new high -- as prices have in recent months. The weekly MACD oscillator is extended on the upside and has narrowed, but a bearish crossover looks like it is being delayed.

In this Point and Figure chart of ATVI, below, we can see that a trade at $61.64 would be an upside breakout and open the way for a rally to around $70.

Bottom line: ATVI needs to have volume surge to 20 million shares or more to make me feel confident about an upside breakout. If this happens I will look forward to gains to $66/$67 and even $70.

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