New Jersey-based PBF Logistics LP (NYSE: PBFX) owns, leases, acquires, develops, and operates crude oil and refined petroleum products terminals, pipelines, storage facilities, and other logistics assets in the United States.
#1 Ascending triangle pattern support: PBFX’s daily chart shows that the stock has currently taken support at the bottom of the Ascending Triangle pattern.
An Ascending Triangle pattern is a bullish pattern and is marked in the chart in blue lines.
The stock has historically taken support near the bottom of ascending triangle pattern before moving higher again.
#2 Double Bottom Pattern: The daily chart shows that the stock is currently forming a double bottom pattern. A double bottom pattern is a strong bullish pattern and indicates a possible upmove in the short term.
#3 RSI nearing Oversold: In the daily chart, the RSI is nearing oversold levels. This implies that a possible reversal is around the corner.
#4 Downtrend Broken: As you can see from the weekly chart of PBFX, the stock had recently broken out of a downtrend. The downtrend line has been marked by a blue dotted line. After the breakout, the downtrend line was tested again before the stock moved back up. This shows that the downtrend is now over and the trend has reversed.
#5 Bollinger Squeeze: The weekly chart of the stock shows a Bollinger Band squeeze. A Bollinger band squeeze foreshadows an upcoming explosive move. The stock also seems to be in a consolidation phase, wherein the range is getting narrower. All this points to a possible upmove.
#6 RSI nearing oversold: The weekly chart also shows that RSI is nearing oversold levels.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can buy half the intended quantity of the stock now at the current price of $19.60 and the rest when the stock breaks out of the ascending triangle pattern, at $22.
TP: Our target prices are based on the ascending triangle pattern breakout. The first TP is $22 and the second TP is $28.
SL: To limit risk, place a stop loss at $18.40. Note that this stop loss is on a closing basis.
The target potential upside for this trade is nearly 12% to 43% in the next 4 months.
- Entry at $19.60: For a risk of $1.20, the target rewards are $2.40 and $8.40. This is a nearly 1:2 and 1:7 risk-reward trade, which means that this trade offers nearly 2X to 7X more potential upside than downside.
- Entry at $22: For a risk of $3.60, the target reward (TP#2) is $6. This is a nearly 1:2 risk-reward trade, which means that this trade offers nearly 2X more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the ascending triangle pattern. 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.