Why a breakout in this software stock may be just beginning, according to the charts

While other stocks in the technology sector have been trending steadily higher, shares of Take-Two Interactive Software (TTWO) have been decidedly rangebound for pretty much the entirety of 2024. But after a strong October, TTWO appears to be setting up for a significant breakout that yields a healthy upside price target. After reaching a peak of around $170 in early February, the stock pulled back to just below its 200-day moving average. Over the next six months, TTWO experienced numerous tests of previous support in the $135-$140 range, always bouncing higher off this zone of support. The relative strength of TTWO vs. the S & P 500 has been fairly weak through 2024, given the resilient uptrend demonstrated by other growth stocks while Take-Two was languishing in a price range. We’ve recently detected an improvement in price momentum, fueling another retest of price resistance around $170. As legendary technical analyst Alan Shaw used to say, “The broader the base, the higher in space.” So a break above this key resistance level would imply much further upside for this software name. We can determine an initial upside target simply by measuring the price range of the basing pattern, in this case from $140 to $170. Assuming a similar move to the upside post-breakout, that would yield a minimum upside target of around $200. A move of that magnitude would certainly confirm a new bullish phase for TTWO. Looking at the weekly chart, we can see that the upper end of the recent price range is part of a much larger price structure going back to 2021. TTWO peaked at around $215 in February 2021 before plunging to a low just below $90 during the COVID era. 2023 saw a dramatic reversal of fortune, as Take-Two moved all the way back up to a 61.8% retracement of the 2021-2022 decline. That 61.8% retracement sits right around $167, forming the upper end of the price range we outlined on the daily chart. So a breakout above $170, while an important signal on the daily chart based on the basing pattern, also represents a significant break above a major Fibonacci retracement level. Based on Fibonacci analysis, a confirmed break of the 61.8% resistance level would imply a retest of the previous high around $215. Given the structure on the weekly chart, along with the pattern measurements on the daily chart, it appears that a push above $170 could mean much further upside for Take-Two. If TTWO would fail to gain a foothold above $170, then the basing pattern on the daily chart would come back into play, suggesting downside support at the 200-day moving average as well as the lower end of the basing pattern. But assuming a breakout does play out this week, it appears that TTWO has much further upside in store into year-end 2024. -David Keller, CMT marketmisbehavior.com DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.