Technical Alert: IBM Successfully Pierces Through its Price Resistance

Summary

  • International Business Machines Corp (NYSE: IBM) gained 3.90% percent in the last trading session.
  • Post breaking out of a crucial resistance level the stock hit a new 52-week high.
  • The stock has broken the rising channel pattern on the daily chart and getting major support from the 50-period simple moving average.
  • On the weekly chart, the price has broken out of an ascending triangle pattern; however, the RSI (14-period) is in the overbought zone.

International Business Machines Corp. (NYSE: IBM) has rallied 22.46 percent from the low of USD 117.36 made on 22 January 2021 to a 52-week high of USD 143.73 tested on 21 April 2021. On Wednesday, the stock prices closed at USD 143.55, up by 3.90%, and was one of the top gainers in the Dow Jones Industrial Average index. The stock outperformed some of its competitors, such as HP INC. (NYSE: HPQ), Intel Corp. (NYSE: INTC) and Microsoft Corp. (NASDAQ: MSFT).

Image Source: © Kaarsten | Megapixl.com

IBM on the daily chart

Source: Refinitiv, Thomson Reuters; Analysis: Kalkine Group

On 21 April 2021, the stock has broken out of its rising channel pattern at USD 139.20 level after consolidating for more than seven months in a channel pattern. The price has registered a decisive break out of the channel pattern that suggests a change in the trend from sideways to upward. The price has also broken out of a horizontal trendline resistance level (black color horizontal line in the above chart) at USD 135.81 level.

Furthermore, the price is trading above its 50-period SMA, acting as a crucial support zone around the lower band of the channel pattern. MACD (Moving Average Convergence Divergence) is also showing a positive crossover and trading above the centerline, depicting a positive momentum for the bulls. The price is trading above its Parabolic SAR indicator, acting as a support level for the stock. However, the momentum oscillator RSI (14-period) is trading in an overbought zone at ~73.26 levels, indicating that the price has reached an overbought zone.  

IBM on the weekly chart

Source: Refinitiv, Thomson Reuters; Analysis: Kalkine Group

IBM Stock price has broken out of an ascending triangle pattern at USD 135.80 level on 20 April 2020 and now, the prices are sustaining above the upper band of the triangle pattern. Upon analyzing the chart, it is clear that the prices are now approaching the downward sloping trendline resistance level.

The stock price is well placed above its 50-period SMA, acting as the important support at the lower end. The momentum oscillator RSI (14-period) is trading at ~67 levels, indicating a possibility of further upside movement in the stock towards the resistance zone. The prices are trading above the Parabolic SAR indicator, acting as an immediate support zone for the stock near the lower band of the triangle pattern. The major resistance level for the stock is at USD 150 level.  

Based on the above chart analysis and technical outlook, IBM price seems to be in an uptrend. Currently, the stock prices are approaching the key resistance zone. The chart pattern suggests that there might be more action expected in IBM if the price breaks the important resistance levels in the coming weeks.


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