Apple Inc (NASDAQ: NASDAQ:AAPL), GameStop Corporation (NYSE: NYSE:GME) and Costco Wholesale Corporation (NASDAQ: NASDAQ:COST) are all trading in confirmed uptrends.
An uptrend occurs when a stock consistently makes a series of higher highs and higher lows on the chart.
The higher highs indicate the bulls are in control while the intermittent higher lows indicate consolidation periods.
Traders can use moving averages to help identify an uptrend, with rising lower time frame moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term uptrend.
Rising longer-term moving averages (such as the 200-day simple moving average) indicate a long-term uptrend.
A stock often signals when the higher high is in by printing a reversal candlestick such as a doji, bearish engulfing or hanging man candlestick. Likewise, the higher low could be signaled when a doji, morning star or hammer candlestick is printed. Moreover, the higher highs and higher lows often take place at resistance and support levels.
In an uptrend the "trend is your friend" until it’s not and there are ways for both bullish and bearish traders to participate in the stock:
- Bullish traders who are already holding a position in a stock can feel confident the uptrend will continue unless the stock makes a lower low. Traders looking to take a position in stock trading in an uptrend can usually find the safest entry on the higher low.
- Bearish traders can enter the trade on the higher high and exit on the pullback. These traders can also enter when the uptrend breaks and the stock makes a lower low indicating a reversal into a downtrend may be in the cards.
The Apple Chart: Apple has been trading in a confirmed uptrend since June 16, when the stock bounced up off the $129 level. On Wednesday and Thursday, Apple tested the eight-day exponential moving average (EMA) and the 50-day simple moving average (SMA) as support and held above the levels, which may give bulls more confidence going forward.
The GameStop Chart: GameStop tested the $113 level as support on July 6 and reversed course into an uptrend. On Thursday, GameStop regained the 200-day SMA as support, which is a great sign for the bulls. If GameStop is able to remain above the 200-day SMA, the 50-day SMA will eventually cross above the 200-day, which would cause a golden cross to print on the stock’s chart.
The Costco Chart: Costco has been trading in an uptrend since June 17 and on Thursday, the stock tested the eight-day EMA as support and bounced. Costco is currently trading just below the 200-day SMA and if the bulls are able to push the stock up above that level it could throw the stock into a new bull cycle.
See Also: iPhone Expected To Come With Periscope Design Starting 2023: What You Should Know
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