Falling Wedges Are Bullish: Marvell Technology Group Ltd Stock (NASDAQ: MRVL)
Marvell Technology Group Ltd (NASDAQ: MRVL) announced their unique custom application-specific integrated circuit (ASIC) that addresses the varied needs of next generation 5G carriers, cloud data centers, enterprise, and automotive application. While the announcement came last week, the price began to find support and was able to breakout of a rising wedge on Thursday.
Mohamed Awad, vice president of Marketing, Infrastructure Line of Business discussed their chips:
“The future of compute requires scalable and highly optimized solutions that can power the data center all the way to the network edge…Marvell brings a fresh and differentiated approach to addressing these requirements by uniquely utilizing Arm platforms to improve power, performance, and time-to-market for our mutual partners.”
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One of the difficult things with the pattern of MRVL is the trend appears to be decelerating and the indication is that the price may even be diverging. However, frequently trends will go through a period of consolidation or correction before the longer-term trend resumes. That is what the pattern looks like for MRVL. Part of the reason is the light volume the price has seen on the pullbacks.
As the price gapped higher on July 13, the price quickly fell intraday and finished near the low of the session. The large closed candle engulfed the two previous day’s candles, but the volume was less than the volume in two of the previous three days. As the price formed a lower high and low as it fell toward it’s $34 support the price reversed with a bullish engulfing candle pattern. The price broke through the descending trendline and completed a falling wedge. The indication of the pattern is a retest of the July 13 high of $39.40.
Option traders may want to consider buying the 18 SEP 20 36/37 long call vertical for around $0.50 or less.