Don't Ignore This Chart!

XRAY Traces Out a Classic Bullish Continuation Pattern


Dentsply International (XRAY) has a large cup-with-handle pattern forming over the last twelve months and the stock is on the verge of breaking rim resistance. Popularized by William O'Neil of Investors Business Daily, the cup-with-handle is a bullish continuation pattern. This means it forms as a consolidation after an extended advance, which runs from October 2014 to a 52-week high in June 2016. The handle is a smaller consolidation after the January-February surge. Either way you slice it, a breakout would be bullish and argue for a continuation of the uptrend. Traditional measuring techniques would target a move from rim resistance that is around the same as the height of the cup, which is 20%. Take this target with a bucket of salt because it is just a guesstimate. 

The indicator window shows a nifty way to plot the Percentage Price Oscillator (Thanks, TB!). The PPO(10,40,0) sets the signal line at zero and plots the PPO as a histogram, which makes it easy to see positive and negative readings. It is positive when the 10-week EMA is above the 40-week EMA and negative otherwise. Notice that the PPO(10,40,1) has been positive since mid February and this confirms the immediate trend (up). 

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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