Don't Ignore This Chart!

A Bad Chart Review for TripAdvisor


The chart for TripAdvisor (TRIP) shows bearish patterns on two different timeframes and the stock looks poised for a breakdown. First, note that the long-term trend is down because the 50-day EMA is well below the 200-day EMA. Also notice that the stock hit a 52-week low with the sharp decline in January-February. The rising wedge looks like a corrective advance within a bigger downtrend, which makes it a bearish continuation pattern. With a sharp decline below 62 today, the stock is on the verge of breaking the wedge trend line and continuing its long-term downtrend. 

Short-term, the stock fell sharply in early August and then formed a flat flag, which is a continuation pattern. The prior move was down and this favors a support break and continuation lower. A flag break would clearly coincide with the wedge break and be quite bearish. The indicator windows show downside volume outpacing upside volume on a regular basis and the Accumulation Distribution Line (ACDL) moving to its lowest level since March. It looks like distribution is underway and this also favors further weakness. An upside breakout at 64 would throw cold water on the bearish case. 

Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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