The popular household brand shows quite a few bullish indications in its charts.
Bullish Move – Chart Indications
#1 Double Bottom Pattern: As you can see from the weekly chart, there is a clear double bottom breakout formed in TUP. The double bottom pattern is a perfect bullish indicator. The stock had dropped to a low level, rebounded, and then dropped again to the same level before rebounding back and breaking out of the pattern.
#2 Price Above 50- and 200-day SMA: The stock’s weekly chart shows that the price is currently above the 50-Day SMA as well as 200-day SMA. This shows the strength of the bulls.
Figure 1 – Weekly Chart
#3 Strong Trend: The stock has been forming higher highs and higher lows in the weekly chart for the past two years. This shows that the uptrend still remains unbroken. This also increases the possibility that the previous high would be broken in the short-term.
#4 Supports: There are multiple supports for the stock in the weekly chart.
- The neckline of the double bottom (from which the breakout occurred) in the weekly chart is a good support level for Tupperware.
- The 50-Day SMA of the weekly chart is a good support level.
#4 Above 50-day SMA in Daily Chart: The stock is currently trading above the 50-day SMA which implies that there is still steam left for the bulls.
A retest of the breakout that happened from the neckline of the weekly chart’s double bottom pattern is currently happening. The stock may move until the 50-day SMA of the daily chart (shown below) before bouncing back again.
Figure 2 – Daily Chart
Recommended Trade
If you want to get in on this trade, purchase shares of TUP on a pullback to the neckline of the double bottom pattern at $61. Our first target price (TP#1) is the previous weekly high, so sell at least half and take profits if shares hit $64. Continue holding the remaining shares once the previous weekly high is crossed. The second target (TP#2) is $70, which is TUP’s previous high price reached in June-July.
NOTE: There is a potential resistance seen near $67 as there was an earlier support at that level. Continue holding till Target Price #2 only if this level is broken. If not, exit trade at $67.
To limit risk, place a stop loss at $59.50, which is below the last pivot low of the daily chart. (Figure 2)
Our target potential upside is 14.75% in the next 1-2 months. For a risk of $1.5, our target reward is $3 (TP#1) and $9 (TP#2) making it a decent risk-reward trade. In other words, this trade offers 2x to 6x more potential upside than downside.
Risks to Consider
The double bottom breakout pattern may get invalidated and the stock may resume its downtrend. The sell-off of the stock could be triggered in case of any negative news or an overall weakness in the market.
Good trading!
Tara
P.S. Please keep in mind that these trade ideas are for information purposes only. We’re not registered financial advisors and these aren’t specific trade recommendations for you as an individual. Each of our readers have different financial situations, risk tolerance, goals, time frames, etc. You should also be aware that some of the trade details (specifically stock prices) are certain to change from the time we conducts our analysis… to the time we publish it… to the time you’re alerted about it. So please don’t attempt to make any of these trades without first doing your own due diligence and research.
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