GlaxoSmithKline Plc (GSK) has been trading sideways between $35 and $39 the past five months making a possible equilateral triangle formation. Can this price action mean an end to the decline since 2014 and a rally ahead? Let's check out the charts and indicators.
In this daily bar chart of GSK, below, we can see that prices have been crossing above and below the 50-day moving average line a number of times since early January when the slope of the average turned positive. GSK is still below the declining 200-day moving average line but a rally of $2 will challenge the line.
The pace of trading volume spiked in late October when prices broke sharply lower and has remained heavier than the turnover from April to September suggesting that new buyers have come into the market. This can be seen better through the rising On-Balance-Volume (OBV) line since November. A rising OBV line tells us that buyers of GSK have been more aggressive than sellers.
The trend-following Moving Average Convergence Divergence (MACD) oscillator has been hugging the zero line since early February after crossing above the zero line in early January. The next move for this indicator is probably to the upside.
In this weekly bar chart of GSK, below, we can see that prices are below the declining 40-week moving average line. The weekly OBV line made a low in December and has shown some mixed improvement. The weekly MACD oscillator crossed to the upside in January for a cover shorts buy signal.
In this Point and Figure chart of GSK, below, we can see a bullish upside price target of $45.50 and a trade at $38.61 will strengthen the picture.
Bottom line: GSK looks poised to break out of an equilateral triangle formation. Though the previous trend is down the Point and Figure chart shows accumulation and not distribution in recent months. Traders should prepare for an upside breakout in the near term.