It’s been about a year since GPRO peaked at $100, and since then it has lost 75% (!!!) of it’s value. Hence, is it time to get bullish on this stock, which has smashed each and every earnings out of the ballpark beyond anybody’s wildest dreams and in fact is making a profit, which most companies at this stage of their public career can only dream off (makes you wonder why it’s down that much then…)?!. Let’s take a look
We count GPRO as having peaked for a large Primary A wave last year and has since dropped in clearly 3 large waves to the recent low of $26.68 on October 14. Price made a picture perfect 3 waves up to the (yellow) major b; which retraced a picture perfect 50% of the prior a-wave down. Back in June we already were onto the (red) intermediate b-wave low, which we traded successfully. And now we count price as, or actually it may already have finished an ending diagonal for a 5th wave. Why? Because price, today, broke and closed outside the upper trendline of the (white) ED. This could mean the end of Primary B, and Primary C could be underway.
Since counting waves is not the end-all, do-all in trading, but simple one of many tools in the tool box of successful traders, let us take a look at the “regular” daily and weekly charts for more observable clues.
First up, as usual the daily chart. Here we look at Technical Indicators (TIs), such as the RSI, MACD, FSTO and our own proprietary A.I. buy/sell indicator. The latter already gave a buy signal a few days ago; all 3 lines -based on short to long term SMAs- moved up at the same time, which was confirmed today (all 3 lines >20).
In addition, we can see clear positive divergence on the daily RSI5 (price keeps on moving down, while the RSI becomes less and less oversold), and that the RSI5 has moved >50 for the first time since August. Moreover, the daily FSTO also moved up >20, giving a buy signal as well. Last but not least, the daily SAR also flipped under price today signalling the start of a new (shorter term) uptrend. Hence, as the green arrows indicate: all the TIs are pointing up. That’s a good sign.
Of course there’s lots of overhead resistance for GPRO, with the daily P, R1, R2 and moving averages, but we deal with these when we get there. For now, the observable hard facts on the daily chart tell us that things on many fronts have improved for GPRO and that the weight of the evidence favors continued upside.
How about the weekly chart then?
Well, also the weekly chart is sporting good positive divergence on the RSI5 (green vs red lines) and on the MACD-Histogram as well. It means that the downside is loosing momentum. Selling is loosing momentum, and that means there is only one thing left instead: buying.
Note how extremely oversold the TIs have been and remained. With these now starting to point back up, things are indeed changing. That’s what we can observable, and that’s what we can act upon. Note also that price found support at the weekly S1, and it’s hard for it to fall much lower as the S2 level is negative… There are no buy signals in place on the weekly yet, like on the daily, and it will take some time before that happens, but clearly the TIs are improving with + div. on several.
Now what if Primary B bottomed last week? How high can Primary C go? Often c waves related to a waves as 1.00x a, or 1.382x a or even 1.618x a. These Fib-extensions then target $100 (a=b=c), $125, and $140, respectively. Rather lofty possible gains from current $29ish… However, first price needs to take out the 20w SMA as well as 50w SMA at around $46-$50. After that we’ll see again what the charts tell us. Again, it’s all abut what we can observe to make the right decision. We let the market guide us, we don’t trade on expectations, but on hard facts. Positive divergence, improving TIs, and a possible completed wave count are such.
Intelligent Investing tracks as many lines of evidence as possible to determine the market’s next move, and Elliot WAVE, TA and TIs are several of these. In this post we showed how we simple but effectively analyze different price charts of the same ticker to gather observable evidence of hard facts that tell us the weight of the evidence. This technique allows us to be mostly on the right side of the market. Do you want to trade (more) successfully as well, using our objective, factual, and open-minded techniques? Then please join here. NOTE: prices will go up starting next month. Lock in a lower rate now!