Visa Inc. (V) was raised to an overweight (buy) rating by a sell side firm Monday. Let's check and see if the credit card giant's charts and technical indicators are in agreement.
In this daily bar chart of V, below, I can see a mixed to bullish picture. Prices have broken a downtrend from February. Prices are trading above the rising 50-day moving average line and above the bottoming 200-day line. The trading volume increased in September-November as prices rallied, but it shrank in December as prices firmed up toward a neckline around $220. The On-Balance-Volume (OBV) line has been weak in December, telling me that sellers of V have been more aggressive. In classic (old school) technical analysis we would want to see the OBV line rise with the price action and it is not doing that in recent weeks. The Moving Average Convergence Divergence (MACD) oscillator is at the zero line and poised to either turn upward or downward to a buy signal or a sell signal.
In this weekly Japanese candlestick chart of V, below, I see a mixed picture. Prices are trading above the 40-week moving average line, but the slope of the line is still negative. Trading volume has slowed in recent weeks. The weekly OBV line has improved from a low in October. The MACD oscillator is above the zero line in buy territory.
In this daily Point and Figure chart of V, below, I can see a possible upside price target in the $273 area. A trade at $220 is needed to refresh the uptrend.
In this second Point and Figure chart of V, below, I used weekly price data. The software is projecting the $273 area as a potential price target like the daily chart above. A weekly trade above $220 is needed for a breakout.
Bottom line strategy: Visa looks like it is going to break out on the upside, but the level of trading volume is a concern. Traders could probe the long side of V but should wait for two consecutive closes above $220 before going long. Risk to $205. Stay nimble.
