Buy Medtronic on Strength Looking for Follow-Through Buying

 | Dec 12, 2017 | 1:24 PM EST
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Medtronic (MDT) has been building a new base pattern the past four months and prices look poised to break out on the upside in the near future. Let's take a closer look at the charts and indicators to see if we should position MDT from the long side.

In this updated daily bar chart of MDT, below, we can see a small saucer-like pattern since August. Prices gaped up in November above the 50-day and 200-day moving average lines and the slope of both moving averages are positive now. Volume has been heavy in the past three months suggesting that long positions may have moved from weak hands to strong hands. The On-Balance-Volume (OBV) line has improved irregularly since late August and gives a slight edge to the buyers of MDT. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line in a bullish mode.

In this weekly bar chart of MDT going back three years, below, we have an "interesting" set up or position of price and indicators. MDT rallied from around $70 to around $90 in early 2017 and then correction around 2/3 of the rally. Prices are below the 40-week moving average line but the line is still pointed up. The weekly OBV line has been neutral to slightly positive the past year and the weekly MACD oscillator is crossing to the upside from below the zero line for a cover shorts buy signal.

In this point and figure chart of MDT, below, we can see that a trade at $84.75 will refresh the rally. A $90.65 price target is displayed.

Bottom line -- aggressive traders could go long MDT on strength above $84 risking a close below $80. $90 is our price target.

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