Canadian tech company BlackBerry (BBRY) on Monday rallied on the back of positive news flow and leaked pictures of what is believed to be the upcoming BlackBerry Passport. That move made a clear mark on the company’s technicals, and BBRY stock is now well-positioned to push higher still, offering good, clearly defined risk and reward.
BlackBerry, an earlier pioneer of smartphones whose products were firmly placed in corporations and governments worldwide, continues to struggle with a reorganization plan after losing much of its market share to rivals like Apple (AAPL) and Google (GOOG).
However, the news flow around BBRY stock over the past nine to 12 months has slowly taken on a more positive tone as the company’s CEO, John Chen, pushes forward with an aggressive restructuring plan.
Investor sentiment around the stock remains depressed, but BlackBerry is beginning to look a ton better from a technical perspective. Moreover, some “smart money” investors have been buying shares of the troubled smartphone maker, and Monday’s leaked pictures of what looks to be the company’s next smartphone managed to organize a rally in BBRY stock to the tune of 4.7%.
BBRY Stock Charts
Looking at the two-year chart of BBRY stock, note the double-bottom formation from summer 2012 and December 2013. The December 2013 lows marginally undercut the summer 2012 lows, which stopped out the last longs and paved the way for a better push higher.
After a good rally into this February, BlackBerry shares were met with diagonal resistance from early 2013 and proceeded to carve out an important higher low vs. the late 2013 absolute lows. Two weeks ago, BBRY managed to break past that pesky diagonal resistance line and now looks ripe to push higher still.
On the daily chart below, note that when BBRY stock broke past the aforementioned diagonal resistance line, it also broke back above its 100- and 200-day simple moving averages (blue and red, respectively). After a week or so of consolidating in a tight manner and thus forming a higher base, Monday’s rally broke the stock out of this pattern.
BlackBerry stock now looks to have near-term room toward the year-to-date highs around $10.60-$10.70. Beyond that (and barring any sudden bearish reversals), the current structure of BBRY stock should be able to move it toward the $12-$12.50 area in the not-too-distant future.
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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.