WEX Inc. (WEX) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, WEX's 50-day simple moving average crossed above its 200-day simple moving average, known as a "golden cross."
A golden cross is a technical chart pattern that can signify a potential bullish breakout. It's formed from a crossover involving a security's short-term moving average breaking above a longer-term moving average, with the most common moving averages being the 50-day and the 200-day, since bigger time periods tend to form stronger breakouts.
Golden crosses have three key stages that investors look out for. It starts with a downtrend in a stock's price that eventually bottoms out, followed by the stock's shorter moving average crossing over its longer moving average and triggering a trend reversal. The final stage is when a stock continues the upward climb to higher prices.
A golden cross is the opposite of a death cross, another technical event that indicates bearish price movement may be on the horizon.
Shares of WEX have been moving higher over the past four weeks, up 23.2%. Plus, the company is currently a #3 (Hold) on the Zacks Rank, suggesting that WEX could be poised for a breakout.
The bullish case solidifies once investors consider WEX's positive earnings outlook. For the current quarter, no earnings estimate has been cut compared to 8 revisions higher in the past 60 days. The Zacks Consensus Estimate has increased too.
With a winning combination of earnings estimate revisions and hitting a key technical level, investors should keep their eye on WEX for more gains in the near future.
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