Webtoon Entertainment (WBTN)'s Technical Outlook is Bright After Key Golden Cross

After reaching an important support level, WEBTOON Entertainment Inc. (WBTN) could be a good stock pick from a technical perspective. WBTN recently experienced a "golden cross" event, which saw its 50-day simple moving average breaking out above its 200-day simple moving average.

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.

A golden cross contrasts with a death cross, another widely-followed chart pattern that suggests bearish momentum could be on the horizon.

WBTN could be on the verge of a breakout after moving 46% higher over the last four weeks. Plus, the company is currently a #1 (Strong Buy) on the Zacks Rank.

Once investors consider WBTN'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.

Investors may want to watch WBTN for more gains in the near future given the company's key technical level and positive earnings estimate revisions.

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This article originally published on Zacks Investment Research (zacks.com).

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