Cisco Systems, Inc. (CSCO) was last reviewed in the middle of April where I commented that, "While CSCO has made two downside corrections since the beginning of 2018, it looks capable of setting new highs in the near-term. If you can afford to risk below $40, trade from the long side looking for a rally to the $48.77 to $50 area."
Checking out the charts this morning (below), I can see that over the past two months that CSCO rallied to just short of our target area before pulling back to a higher low. The price pattern looking back to February looks like a large ascending triangle formation.
Triangle patterns tend to break out about 2/3 to ¾ of the way through the pattern so let's look closer as a breakout could be happening soon.
In this daily bar chart of CSCO, below, we can see that the triangle pattern, with roughly equal highs around $46 and higher lows, was made in early February, early April and late May. CSCO has crossed above and below the shorter 50-day moving average line a number of times over the past four months. Recently the slope of the 50-day line turned positive again.
The 200-day moving average line is positive. The volume pattern fits what is typically seen during a triangle - that volume diminishes or shrinks as the trading range narrows. As the trading range narrows the opportunity to make money is reduced and active traders go elsewhere to trade.
The daily On-Balance-Volume (OBV) line shows a high in the middle of February and just some slight weakness over the subsequent months. A declining OBV line suggests that sellers of CSCO have been more aggressive.
In the lower panel is the Moving Average Convergence Divergence (MACD) oscillator which looks like it has recently turned up, signaling a cover shorts buy.
In this weekly bar chart of CSCO, below, we have a mixed picture with regard to the indicators. Prices are above the rising 40-week moving average line so the trend is up.
The weekly OBV line shows a more bullish picture than the daily line. Here the OBV line has been strong the past four months and suggests strong accumulation/buying on this time frame.
The weekly MACD oscillator has been above the zero line for much of the past three years but has been in a "take profits mode" the past two months.
We manipulated this Point and Figure chart of CSCO, below, to eliminate a lot of the "noise" and still generate a bullish price target.
This chart is projecting that CSCO has the ability to reach $57. A close at $47 will refresh the uptrend and a decline to $40 will probably weaken the chart and the trend.
Bottom line: Traders and investors who are long CSCO should continue to hold those positions risking below $40. Additional longs or new longs could be entered on a move above $47. $50 and $57 are my new price targets.