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Trends & Analysis
News

USD gains amid Fed rate cut speculations

News

Is the silver squeeze back?

News

Li Auto’s stock hits a speedbump on Q1 results

News

Gold closes week higher on rate cut speculations

News

Week Ahead Preview: 20th of May

News

Walmart’s stock hits record high on Q1 results

Asset Watch

Should you fade then trade Visa?

Wednesday, February 1, 2023

Despite fears of an economic slowdown, Visa outperformed analysts’ estimates on both the top and bottom lines on Jan. 26. During the Q1 earnings call, CFO Vasant Prabhu said:
“In total spend, it’s remarkable stability. What’s happening is as goods spending slowed down a bit, services spending really took up all the slack. And so, consumers have just shifted their spending but they’re spending the same amount, and that’s why debit has stayed resilient…
“Some people were worried that when things settle down, that debit might start to see some slowdown. But as you’ve seen, debit has stayed resilient even as credit has recovered.”
Visa Stock Chart Trading View

Yet, while the fundamentals are headed in the right direction, patience may be warranted in the weeks ahead.

Visa’s 20-day moving average has largely acted as support and resistance since July. And interestingly, the last two times the credit card giant ran away from its 20-day MA alongside high RSIs, pullbacks followed, and reconnections occurred.

The grey arrows and black circles show how overbought conditions often elicit short-term reversals, and the current RSI of 75 is like the 74 from October. Back then, Visa suffered a peak-to-trough pullback of 8.6% before the uptrend continued. Similarly, a lower RSI of 66 in August ended with a peak-to-trough pullback of 7.7% before another short-term rally followed.

As a result, is the third time a charm, or will the upward momentum continue in February?


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