AT&T Looks Impressive to a T Ahead of Earnings

AT&T (T) has struggled and made missteps in the past but we want to be forward looking. The company is scheduled to report earnings before the opening of trading Thursday, so let’s check out the charts to see if there can be some capital gains on top of a nice dividend.

In the daily bar chart of T, below, we can see that the shares have made a large bottom pattern the past 12 months. This bottom becomes more noticeable if you draw a “neckline” across the $21.50 level. We can see a low December and then a big retest in March. Prices proceed to make higher lows in June and July. The shares are trading above the rising 50-day moving average line and above the bottoming 200-day line.

The trading volume has decreased from April but the On-Balance-Volume (OBV) line shows a rise from December telling us that buyers of T have been more aggressive than sellers. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line.

In the weekly Japanese candlestick chart of T, below, we can see some positive clues. Prices have traced out a bottom formation and trade above the 40-week moving average line. Two lower shadows — one in June and one in July tell me that traders are rejecting the lows.

The weekly OBV line shows a slowly firming message from March. The MACD oscillator is in a bullish alignment above the zero line but the two moving average lines shows some narrowing.

In this daily Point and Figure chart of T, below, we can see a potential upside price target in the $29 area.

In this weekly Point and Figure chart of T, below, we can see the same upside price target of $29. A trade at $25 will be an important upside breakout.

Bottom-line strategy: Traders who are long T from lower levels should continue to hold those positions. Risk to $19.50 now. I have no special knowledge what T may report to shareholders on Thursday, but the charts are positive looking and strength above $21.50 is likely to precipitate further gains.