Shares of LinkedIn (LNKD) , the online professional networking platform, have been moving in 35-week cycles of rising prices and declining prices. They now look like they are prepared to start another uptrend.
The weekly chart shows that the pattern started with a rally that began in early 2013, followed later that year by a drop in the stock price that created a clearly defined downtrend line. The next up cycle began after a break above that downtrend line in June 2014, and 35 weeks later, the stock saw new highs. Those highs were followed by a series of lower highs and lower lows this year.
Now, at another cycle low point in time, the stock price is breaking above this last downtrend line. The relative strength index is crossing above its centerline and moving average convergence/divergence is making a bullish crossover. Chaikin money flow is above its centerline and accumulation/distribution has crossed over its 21-period signal average. This is a bullish combination of positive price and money flow indications.
On the daily chart, the start of this potential transition from downtrend to uptrend looks like a rising triangle pattern, with a series of higher lows below resistance in the $200 area. The stock has broken above that horizontal pattern resistance line and the latest 35-week downtrend line. Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator and is showing positive price momentum on both timeframes. The money flow index, a volume-weighted measure of relative strength, has crossed above both its 21-period signal average and centerline, reflecting positive money flow momentum.
LinkedIn reports its most recent quarterly earnings results after the close on Thursday, and positive fundamental news would further the next cycle transition and potentially initiate another 35-week uptrend.
This article is commentary by an independent contributor. At the time of publication, the author held noposition in the stock mentioned.