Popular industrial packaging products and services company Greif, Inc. Class A (NYSE: GEF) seems to be all set for a price surge in the near-term.
There are quite a few bullish indicators in the charts of GEF.
#1 Strong Supports: As you can see from the daily chart of GEF below, the stock has taken support near its 15-day EMA.
The current price is also near a strong long-term support level as indicated by the blue dotted line.
#2 Hammer: The latest candlestick is a hammer which is a possible bullish sign.
#3 High Volume Candle: On December 7, 2017, there was a big green high-volume candle as shown in the daily chart below.
This candle indicates strong buying. Mid-point of such a candle, which is the 50% retracement level, usually acts as a big support. The current price of the stock is at this level.
#4 ADX: ADX indicates that the strength of the uptrend is still remaining intact.
#5 Flag Pattern: As seen from the weekly chart below, the stock was in a strong uptrend from February 2016 to December 2016. Then the stock started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart below. On the week ending December 4, 2017, the stock broke out of the flag. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case).
#6 Above 30-week EMA: The stock is currently trading above its 30-week EMA, which shows bullishness.
#7 MACD crossover: In the weekly chart of GEF, the MACD line was sloping downwards from December 2016 till the start of December 2017. On the week ending December 4, 2017, the MACD line (light blue color) crossed above the MACD signal line (orange color) and started moving upwards. A potential buy signal is generated when the MACD line crosses above the MACD Signal Line. The MACD line has also crossed above the zero line. All this indicates a possible bullish setup.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase shares of GEF at the current price level of $60.89.
TP: Our target price is $70. This is based on the breakout level from the flag pattern.
SL: To limit risk, place a stop loss at $59.80, which is below the low of hammer candlestick. Note that this stop loss is on a closing basis.
Our target potential upside is almost 15% in the next 2-3 months. For a risk of $1.09, our target reward is $9.11. In other words, this trade offers nearly 8x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the long-term support level and goes below the 15-day EMA. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in its sector.
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