by Serge Berger | February 26, 2014 8:16 am
On Tuesday, BlackBerry (BBRY) made headlines at the Mobile World Congress trade fair in Barcelona that sent BBRY stock north.
BBRY unveiled a pair of smartphones: The Z3, a 5-inch touchscreen smartphone, as well as the Q20, which is a new phone using the classic QWERTY keyboard.
The Z3, which is aimed to be a lower-end smartphone priced at under $200 (without subsidies), is being built under a partnership deal with FIH Mobile, a subsidiary of Taiwanese electronics company Foxconn Technology. The device is scheduled to go on sale in April and focus on Indonesia, a market where BlackBerry’s BBM messaging service is in widespread use among customers.
The higher-end Q20 phone will have a traditional BlackBerry look and satisfy customer’s requests for an old-school Blackberry keyboard. The phone is steered toward the government and business customers, where email-heavy clients still favor the speed of a physical keyboard.
At the MWC, Blackberry CEO John Chen reportedly also gave hints that he could be open to selling the instant messaging service, BBM, at an undetermined point in the future.
All of this news was positively received by traders and investors, who sent BBRY stock higher by 7.83% Tuesday, leading shares to break past a crucial resistance area.
From an active investor’s point of view, one way to pick spots for entry points to trade is by drawing several simple resistance lines that connect high points over recent years, months and weeks.
BBRY stock has been severely beaten down in the past few years. The red, dotted straight line on the below weekly chart marks the downtrend dating back to September 2011, which BBRY stock managed to break above in January as a first sign of an improving picture. Since breaking above the dotted line in January, however, BBRY stock hasn’t done much besides consolidating since then.
Until yesterday, that is.
Tuesday’s rally broke BlackBerry past its next resistance line (black), as well as its 200-day simple moving average (red), in what was a technically significant and bullish move.
On the daily chart below, BlackBerry’s rally past the black downtrend line is more clearly visible. At the same time, Tuesday’s rally also pushed BBRY stock out of a trading range (blue lines) that had been building since late January. Last but not least, the near- to medium-term momentum oscillators are not yet in overbought readings.
All of this points to BBRY stock likely having more upside over the coming weeks and months. As a next upside target, I have the $11.50 to $12 area in focus.
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Learn more about the strategies Serge Berger uses to create profits in the market every day. Download his trading plan in the Essence of Swing Trading e-book by clicking here. As of this writing, he did not hold a position in any of the aforementioned securities.
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