The American global telecommunications conglomerate headquartered in Philadelphia, Pennsylvania, Comcast Corporation (NASDAQ: CMCSA) seems to be getting ready for a price bump as per the latest charts.
Bullish Move – Chart Indications
#1 Falling Wedge Pattern: As you can see from the daily chart of Comcast, the stock had been forming a falling wedge pattern for the past several months. This pattern is marked as blue color lines. CMCSA has previously taken support at the bottom of the wedge before bouncing back again. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.
#2 IH&S Pattern: The stock’s daily chart shows that the stock has been forming an Inverted Head and Shoulders pattern. This is marked in the chart in orange color. This is a possible sign of an upcoming bullish move.
This looks like a good support area.
The stock is also trading near its 50-day SMA, indicating that the bulls are in control.
#4 Alligator Waking up: William’s Alligator is currently waking up in an upward direction (green line above the red line and blue line).
This indicates a possible bullish bias.
#5 Good Support: In the weekly chart, there is a good support level nearby which is the breakout level of the previously formed flag pattern (blue color lines). This support level is marked as a green dotted line.
#6 %K above %D Line: The weekly chart of Comcast shows that the %K line (light blue color) has crossed above the %D line (orange color) in stochastic. When this happens, it usually indicates a bullish setup.
#7 MACD cross: The MACD line has crossed above the signal line in the weekly chart. This is a bullish sign as well.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can buy the shares of CMCSA at the current price of $32.29.
TP: Our target prices are $40 and $47 in the next 4-6 months.
SL: To limit risk, place a stop loss below $31.20. Note that the stop loss is on a closing basis.
Our target potential upside is 24% to 46% in the next 4-6 months. For a risk of $1.09, our first target reward is $7.71 and second target reward is $14.71. This is a nearly 1:7 and 1:13 risk-reward trade.
In other words, this trade offers 7x to 13x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge pattern with high volume. 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 the sector.