The financial service holding company based in Winston-Salem, North Carolina, BB&T Corporation (NYSE: BBT) seem to be poised for a price surge as per its latest charts.
#1 Falling Wedge Pattern: As you can see from the daily chart, BBT has been trading within a falling wedge pattern during the past few weeks. This is marked in blue color in the daily chart. Currently, the stock is near the bottom of the falling wedge pattern. A Falling Wedge Pattern is a bullish pattern. Once the stock moves up and breaks out from it, it has the potential to move further up.
#2 Flag Pattern: The stock was in a strong uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern, which is a continuation pattern. The flag pattern is marked in orange color in the daily chart. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend which is an uptrend in this case.
This points to a possible reversal.
#4 Bullish Engulfing: The daily chart shows that the latest candlestick pattern is a bullish engulfing pattern.
This indicates that the price may move higher in the short term.
#5 Strong Stochastics: The stochastics oscillator shows that the %K (blue) line is currently above the %D (orange) line and moving up.
This indicates a possible reversal from the current short-term downtrend.
#6 Unbroken Uptrend in Weekly Chart: As evident from the weekly chart, the stock is in an uptrend as it has been making higher highs and higher lows for the past several weeks. The stock is also above its 200-week SMA. These are all bullish signs.
#7 Double Bottom Pattern: From the weekly chart of BBT, we can see that the stock is currently forming a Double Bottom pattern. This is marked in the chart in orange color. A double bottom pattern is a strong bullish pattern and a breakout from it foretells a possible upmove in the short term.
#6 Good Support Levels Nearby: There are good support levels for the stock nearby. The stock has currently taken support at the 78.6% Fibonacci retracement level. In addition, the stock is also near a long-term resistance-turned-support level (marked as a green dotted line). This seems like a good level for the stock to bounce upwards.
#7 Other Bullish Indications: The CCI is above -100 and moving up, while the RSI is also moving up from oversold levels in the weekly chart. These are all bullish signs.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of BBT at the current price of $51.16.
TP: Our target prices are $56 and $65 in the next 3-6 months.
SL: To limit risk, place stop-loss at $49.40. Note that stop loss is on a closing basis.
Our target potential upside is 10% to 27% in the next 3-6 months. For a risk of $1.76, our target rewards are $4.84 and $13.84. This is a 1:3 and 1:8 risk-reward trade.
In other words, this trade offers nearly 3x to 8x 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 a 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.