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Feb 24

Visa ($V) – Ready For The Payoff

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.┬áThis is textbook stuff.

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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.

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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.

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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.

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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.

 

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