Chances are, if you’ve ever watched a video on the Internet, Brightcove (BCOV) helped get it there. This Boston-based tech firm helps companies publish and distribute video and other digital media via its Brightcove Video Cloud, Zencoder and Brightcove App Cloud platforms.
Brightcove IPO’d its stock in February 2012 around the $14.50 mark, after which it soared to the $23 area. BCOV had a herky-jerky run down to lows below $5 in January 2013 but it’s since leveled off.
The Profit Scanner powered by Recognia has identified a bullish pattern that indicates Brightcove could go on a short-term tear.
On Feb. 24, when Brightcove stock closed at $9.38, Profit Scanner spotted a Bullish Continuation Wedge pattern on the daily chart that is expected to push BCOV stock to a target of $14.25 to $15.50 during the next 36 trading days.
Chart courtesy of Recognia
A Bullish Continuation Wedge tells traders that after a temporary pause, the prior uptrend should continue. A Bullish Continuation Wedge represents a brief interruption to an uptrend, taking the shape of two converging trendlines that are both slanted down, going against the trend. In this period, the bears try to get a leg up over the bulls, but the bulls triumph in the end as the break north of the upper trendline is a sign of a continuation of the prior uptrend.
It should be noted that the volume surrounding this pattern wasn’t quite as hearty as traders sometimes see, coming in at 340,585 shares but taken in context of Brightcove’s average daily volume of 499,395 it could prove significant. Still, traders should always watch for a close below a significant moving average or below current support at $9.33 as a clue that a pattern may be invalidated.
Additionally, consider using stop losses. Profit Scanner calculates a close below $6.84 as a good stop for the trader who has an average risk tolerance, but Profit Scanner members can adjust the stops based on their own trading profiles.
And while the intermediate-term bullish target for Brightcove is $14.25, it’s good to know that current resistance for the stock is at $14.01, so if don’t be shy about taking profits as it approaches the $14 level.
Prior to its latest earnings report on Feb. 4, the company gave two negative revisions and saw its current year loss estimate widen, which spooked some analysts though revenues came in higher than expected. Despite the fact that current estimates for next quarter are projecting a loss, Brightcove has a history of positive earnings estimates. While technical analysis as such doesn’t factor in data points like earnings, Brightcove is expected to report earnings in late April or early May, which could coincide with the Bullish Continuation Wedge’s 36-day duration.
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