In my technical-analysis work, DirecTV (DTV) is one name that's caught my eye lately. This is partially due to the similarity of the corrective declines within the stock's larger uptrend, and I'm also liking the price level of DirecTV's Nov. 13 low. This area contains a strong confluence of Fibonacci price relationships between $47.48 and $48.06.
Let's explore the daily chart first. The first major decline, as illustrated above, lasted 36 days and amounted to a $7.15 drop in the shares. The second lasted 30 days and came to $7.48, and the most recent decline -- again, into the Nov. 13 low -- was similar to these, totaling $7.17 and having lasted 33 days.
So far we've begun seeing a bit of a lift off the key low mentioned above, and if DirecTV continues to hold above it, the upside potential will be to the $57.12 area. My strategy will be to buy a pullback to the stock's recent low, with the maximum risk defined below the price cluster zone at the $47.48-to-$48.06 area.
Now, let's take a look at a pullback zone that I've identified on the 30-minute chart. After running all the possible Fibonacci price relationships, I've determined that the $48.74-to-$49.20 area stands out as a potential buy entry.
Now, this is a very clear buy setup, but let's take a look at the most recent data in order to identify possible hurdles the stock may encounter on the way up. Knowing where the resistance might show up can be helpful for traders who like to play it tight, or for those who want to know when the odds say it may be OK to add to a long position.
The analysis on the above chart focuses on the most recent data, and I have run the retracements and 100% projections of the illustrated prior rally swings. These price relationships define an important hurdle at the $50.18-to-$51.08 area. A rally above this zone would suggest that one should add to any current long position, as it would signal that the rally is likely to continue toward the target.
For more information about trades and triggers, please refer here.
