SNPS: Favorable Setup After a Resistance Break
For most of the past year, Synopsys (SNPS) has been stuck in a range between a resistance zone around $530 and support around $375. Typically, when range formations take shape after a major downtrend, they end up being bullish reversal patterns.
Now this is even more evident if we take a closer look at the shape of the pattern that has been forming since late September. Since last fall, price action has formed a large possible double bottom formation, with the lows being carved out from November and March support.
The resistance level to watch is around $530. A break above that level would give a trader confirmation of a completed pattern and would begin to penetrate the massive earnings gap from early September.
As price approaches $530 resistance, momentum seems to be supportive of the uptrend. The MACD lines have been above the 0 line, supportive of a bullish momentum regime. Another constructive piece of evidence would be a near-term waning downside momentum, suggesting that the MACD line and the signal line could create a bullish crossover soon.
If SNPS does break above $530 resistance, where could price possibly head to next?
To answer that question, we recall that markets love symmetry in both price and time. A trader would measure the depth of the price formation, from support to resistance, which is roughly $155. Naturally, a measured objective could place price above yearly highs near $685. Since this formation took nearly 9 months to develop, it could take Synopsys roughly 9 months to travel that distance.
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