Hot Trade Alert: Why $SNAP is Set Up for Explosive Buy Entry Now

$SNAP was one of the biggest winners of 2020. Now, this explosive growth stock is once again setting up with an ideal buy entry point. Here’s our analysis and simple trade plan to score big profits from its next potential breakout.

Snap, creator the popular Snapchat mobile app, was one of the top-performing stocks of 2020.

After breaking out above its base in October 2020, $SNAP rocketed 150% higher to its recent high in February 2021.

Stocks that score such a big advance generally require a few months of rest to digest their gains and form a valid basing pattern before resuming their strong uptrends.

After consolidating in a sideways pattern for the past three months, $SNAP is now poised for another massive breakout that could launch the explosive growth stock to another wave higher.

Continue reading to see why $SNAP should be one of the top stocks on your watchlist for potential buy entry now.

Cup with handle on the weekly chart

When analyzing stock charts, we start with the longer-term weekly chart time frame to see the “big picture” of the overall trend.

On the weekly chart of $SNAP below, notice the stock is currently fleshing out the handle portion of a cup with handle pattern, one of the most reliable bullish chart formations for buy setups:

Press chart to view full-size image

The “cup” portion of the pattern is about 35% deep, as measured from the February high down to the March low.

The “handle” has formed about 15% off the highs, which is also fine.

Most importantly, volume surged higher when $SNAP rallied above its downtrend line (from the February high).

Notice the higher weekly volume both when the stock broke above its downtrend line (“A”), and again when the price dipped below its 10-weekly moving average (“B”).

The increasing volume at those levels points to institutional accumulation, the gasoline that always powers the best stock breakouts.

Although there was not a big percentage gain when $SNAP undercut its 10-week moving average (“B”), the reversal price action was bullish and closed well off the lows of the week–confirmed by a substantial increase in volume.

Zooming in to see the ideal buy entry setting up NOW

Drilling down to the shorter-term daily chart interval, notice the large volume spike on April 23 that was sparked by the company’s latest earnings report:

Press chart to view full-size image

The opening gap up on April 23 failed to hold, and the stock dipped below its 20 and 50-day moving averages intraday.

However, it’s quite positive that the price closed both above its 50-day MA and near its high of the day.

On the next day of trading (April 26), the price again dipped below its 50-day moving average, but reversed to close back above it.

After two consecutive days of bullish reversal action, $SNAP closed higher on April 27 and is now set up for an ideal buy entry point.

Cup with handle buy trigger with early entry points

The standard buy entry point for a cup with handle pattern is a break above the high of the “handle.”

That corresponds to a buy trigger above the $65.86 level, which also puts the stock above its resistance in the $64-$65 area.

Although many traders prefer to wait for a break above the handle high before buying, others may be comfortable with testing the water by entering with partial share size prior to the highs.

As of April 27 close, there are two such early buy points in play:

  1. If the price pulls back from here, then consider buying with partial share size near support of the 50-day moving average ($60-$61 area).
  2. A break above the April 23 high of $63.20 also presents an early buy entry with partial share size.

If buying $SNAP with either of the early entry points above, keep your risk in line by only entering with partial share size. Then, consider adding to your position after the price confirms a breakout above the high of the handle (above $65.86).

Sign up now for your Wagner Daily subscription to receive our exact entry, stop, and target prices for $SNAP, as well as our top picks for the most explosive growth stock trade–sent directly to you every night! Choose The Wagner Daily PRO version to also gain access to our exclusive Morpheus Swing Trader Chat and educational mini-lessons.

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