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After Golden Cross, Pixelworks (PXLW)'s Technical Outlook is Bright

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Pixelworks, Inc. (PXLW) reached a significant support level, and could be a good pick for investors from a technical perspective. Recently, PXLW's 50-day simple moving average broke out above its 200-day moving average; this is 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.

There are three stages to a golden cross. First, there must be a downtrend in a stock's price that eventually bottoms out. Then, the stock's shorter moving average crosses over its longer moving average, triggering a positive trend reversal. The third stage is when a stock continues the upward momentum to higher prices.

This kind of chart pattern is the opposite of a death cross, which is a technical event that suggests future bearish price movement.

Over the past four weeks, PXLW has gained 104.6%. The company currently sits at a #3 (Hold) on the Zacks Rank, also indicating that the stock could be poised for a breakout.

Once investors consider PXLW's positive earnings outlook for the current quarter, the bullish case only solidifies. No earnings estimate has gone lower in the past two months compared to 2 revisions higher, and the Zacks Consensus Estimate has increased as well.

Moving Average Chart for PXLW
Moving Average Chart for PXLW

With a winning combination of earnings estimate revisions and hitting a key technical level, investors should keep their eye on PXLW for more gains in the near future.


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