T-Mobile: TMUS Stock Is in a Hot Spot

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Shares of wireless carrier company T-Mobile US Inc (TMUS) have largely traded in a defined range since the second half of last September. However, the way in which TMUS stock has bounced off its October and mid-December lows suggests that a good support level has formed — and thus, the stock favors further upside in coming weeks.

beat the bell stock investing adviceTelecommunications companies seem to be constantly involved in takeover talks or battling with industry litigation, which is why I usually stay away from these stocks. However, sometimes telecoms offer great opportunity — particularly if the broader technical picture for the entire group looks promising.

A host of analysts have recently upgraded their outlook on TMUS stock, including Goldman Sachs, which just upgraded shares from a previous price target of $27 to its new target of $37. Credit Suisse has T-Mobile as its best telecom pick for 2015.

Of course, based on all these upbeat feelings, a contrarian might stay away from T-Mobile or even bet against it, However, when I see analyst optimism line up with a technically sound picture, more often than not a stock will try its best to wiggle higher.

T-Mobile is not scheduled to release its next batch of earnings until Feb. 25, giving traders some time for a potential upside trade in the stock to play out.

TMUS Stock Charts

Starting off with the multiyear view, we see that TMUS stock has a well-defined line of resistance (red dotted line) around the $37-$38 area. We also see that TMUS has formed a big-picture double bottom with its lows in early 2010 and in June 2012.

So far, T-Mobile has bumped into the aforementioned red-dotted resistance line four times since 2008, and the consolidation phase (black parallels) in the second half of 2014 increasingly looks like it can bring the stock back up toward this line of resistance.

In fact, through a purely technical lens, one could label the price action since the second half of 2011 a cup-and-handle formation, which is bullish by nature.

TMUS stock charts weekly
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On the daily chart, note how quickly/violently TMUS stock rejected its mid-October and mid-December lows. Last week, the stock bumped back into a horizontal line of resistance (black line) around $29.60 for the fourth time since early October. Over the past few days, TMUS has begun to consolidate at this line of resistance, which is also just below its 200-day simple moving average (red line).

TMUS stock charts daily
Click to Enlarge

Active investors and traders could look to buy TMUS stock on a break past the $29.60 area on a daily closing basis for a move that could take the stock toward $32.

As always, any quick bearish reversal would negate the setup.

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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.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/01/t-mobile-us-inc-tmus-stock/.

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