Travelers (TRV) has rallied in nearly a straight line from its November low. The price action is being confirmed by our indicators, but prices are overbought and a pullback should not come as a surprise.
In this 12-month daily chart of TRV, above, we can see prices are above the rising 50-day and 200-day moving averages. Prices have broken above the resistance in the $118-$119 area. The volume of trading has been heavy since mid-October and the On-Balance-Volume (OBV) line has been signaling aggressive buying since early November. The trend-following Moving Average Convergence Divergence (MACD) oscillator has been bullish since late November. The two averages that make up this oscillator have begun to narrow and could generate a liquidate-longs or take-profits sell signal in the near future.
The breakout on the daily chart can also be seen on this three-year weekly chart of TRV, above. Prices are above the rising 40-week moving average line. The weekly OBV line has been improving the past six weeks and the MACD oscillator on this weekly timeframe has just crossed above the zero line for a buy signal.
Strategy: Prices are extended on the upside, so be on alert for a possible corrective dip. Prices may pull back to retest the breakout area around $118. If volume is light on this anticipated pullback, we would remain positive on TRV.