We mentioned Visa ($V) in our Nickels and Steamrollers post as a way to demonstrate how you have to learn to ignore the noise, and not be tempted to pick tops, in order to ride incredible trends.
I wanted to update the charts on Visa as it remains in a very favorable risk-reward position.
Here’s the last four months on a daily chart. We see a shallow consolidation from all time highs, a pullback to the first support at the last gap higher, and a retest in conjunction with the 50dma. This is textbook stuff.
It has a little work to do on a relative basis, it peaked vs the $SPY early in January and it’s interesting that with the this weeks decline in the broader market it’s started to reassert itself.
It looks better relative to its rival in the payments space Mastercard ($MA), managing to maintain its series of higher lows over the last 3 months.
If we zoom in even closer to a Visa 30min chart showing the last 6 weeks we can see the first two weeks of February were notable for a bullish divergence with momentum pointing higher whilst price made a marginal new low. Although we are already long on a long-term trend following basis, for those that like to play shorter-term setups this one has now triggered a long entry following Friday’s positive price action.
Nothing is ever guaranteed in this business but this is one of the better setups out there right now for short-term and long-term players, and is displaying exactly the kind of conditions I like to see for a resumption of an uptrend. For those already long this also represents a good opportunity to increase position size as the payoff from waiting out a seven-week consolidation appears near.