MasterCard, Inc. ($MA) has been a tremendously active stock lately, as evidenced by its recent 20-point rally from the $195 support level…and more movement could be seen ahead. I’ve got 5 reasons why you should keep your eye on MasterCard next week.
1. $MA is Consolidating
The 15-minute chart shows MA has formed a well-defined, two-day consolidation range from $212 to $217.50. This consolidation formed after a recent rally from $203 to $217, which means price is resting for the next big run, as consolidations are usually precursors to breakouts.
2. $MA has Formed a 2-Day Inside Value Relationship
A 2-Day Inside Value Relationship usually indicates a breakout opportunity. This relationship occurs when the pivots for the upcoming session fall within the pivots from the prior session. In this case, I’m using the third layer of the Camarilla Equation for this analysis. When L3 and H3 for the upcoming session are inside L3 and H3 from the prior session, significant breakouts can be seen.
Suffice it to say, this means price is winding up for a breakout opportunity.
If you need a refresher on the Camarilla Equation, read my brief article “The Camarilla Equation Explained”.
3. $MA is Sitting Below Major Resistance
MasterCard is consolidating beneath 2-month resistance at $217.20, which is a razor sharp level. This level has rejected every advance over the last two months, with each rejection leading to a 20-point drop.
Adding further relevance to this level is the fact that $217.20 was also support as far back as February, meaning this price has become a “line in the sand” between bulls and bears.
Eventually (next week), we will see a big move away from this level, either up or down, which could lead to the next 20-point run.
4. $MA has Formed an Inside Day Candlestick Pattern
The daily chart shows MA has formed an Inside Day candlestick pattern, which occurs when the current day’s range (low to high) falls within the range of the prior session (low to high). This is universally seen as an indication that a breakout is ahead.
Traders love to see this relationship and the fact that this formation has formed beneath a major area of resistance is lip-smacking.
5. $MA is Holding Beneath Dual Pivot Resistance
Not only is MasterCard holding beneath an incredible visual resistance level ($217.20), but there is also monthly pivot resistance just above this price. The monthly Pivot Point from the Floor Trader pivots is sitting at $218.35, while the monthly H3 Camarilla pivot is at $218.85.
These two monthly pivots, in addition to visual resistance at $217.20, create a solid wall of confluence.
If MA cannot break through this area of resistance, we could see a steady fall back to support at $195.
However, if this area of resistance can be broken, look for price to rally back toward the $232 to $240 range.
In either case, it’s clear that MasterCard is winding up for the next big breakout opportunity. Watch $212 and $217.50 for entry confirmation next week.
Let’s catch a piece of the action!
Cheers!
Frank Ochoa
PivotBoss.com
Follow Frank on Twitter: http://twitter.com/PivotBoss
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