Priceline Group Inc (NASDAQ:PCLN) has spent most of its time in a holding pattern ever since its post-earnings gap higher in February. While this consolidation phase persists, the bulls increasingly look ready to push Priceline stock higher, toward a defined price target near the 2015 highs.
In my circles of hedge fund traders, PCLN often comes up in conversation as it combines an underlying growth story with a stock that shows plenty of movement and acts well technically.
Since a major breakout fake-out move in October 2015, Priceline stock has seen more swings than the Orange County Fair, and PCLN very much respected important technical levels.
Let’s gain some perspective on Priceline and see where near- to medium-term opportunities might lie.
Priceline Stock Charts
First, on the longer-term chart, note that PCLN since early 2014 has largely been in a consolidation phase. The aforementioned breakout attempt from last October was enough to suck in an entire herd of momentum chasers, then quickly stopped them out upon the bearish reversal.
After it was all said and done, by early February, PCLN had dropped about 35% from peak to trough, giving any weak bulls a wedgie that’s difficult to forget. But despite the sharp drop off the October 2015 highs, the February lows managed to hold the stock’s major uptrend line from 2009.
Since then, Priceline stock has worked back to the upper end of this big-picture consolidation phase, which and all else being equal now makes a more sustainable breakout more likely.
On the daily chart, we see that PCLN stock gapped notably higher after its February earnings report. The stock quickly became overextended, however, then settled into a consolidation phase right below horizontal resistance as marked by the black line.
In other words, the stock has spent the better part of the past two months coiling up below well-defined horizontal resistance on the daily chart, which also matches up with the multiyear horizontal resistance line from the chart above. This also has allowed Priceline stock’s near- and medium-term moving averages to catch up and potentially act as a layer of support.
On the upside, if and when PCLN stock manages to break and hold above the $1,355 area, shares could begin working into the down-gap from last November, which marked the big breakout fake-out move discussed earlier (blue box). This gap would fill around the $1,450 area and would be a defined price target for active investors and traders.
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