Multi-billion dollar financial services company WSFS Financial Corporation (NASDAQ: WSFS) seems to ready for a price surge according to its latest charts.
There are quite a few bullish indicators in the charts of WSFS.
Bullish Indications
#1 Cup and Handle pattern: The daily chart of WSFS shows that a cup and handle pattern is being currently formed. This is marked in the chart below. The cup and handle pattern is a consolidation and breakout pattern. In this case, the stock has been forming the pattern over the past 6 months. The cup (blue color) was formed between May 2017 and November 2017. Currently, the handle (pink lines) is being formed and the price is near the middle of the handle.
Daily Chart of WSFS
#2 MACD above Signal Line: The daily chart of WSFS shows that the MACD (light blue color) has crossed above the MACD signal line (orange color). A potential buy signal is generated when this happens and it typically indicates a bullish setup.
[hana-code-insert name=’adsense-article’ /]#3 Double Bottom Pattern: In the daily chart of WSFS, there is a Double Bottom pattern formed.
This is marked in the chart as shown below in light blue color.
A double bottom pattern is a bullish pattern and indicates that the stock has formed a base and may move up in the near future.
#4 Near Support Area: The weekly chart of WSFS shows that the stock is currently near a support area.
This is marked on the weekly chart in purple color.
This area is a strong support as the stock had consolidated for a while (shown as a green rectangle) indicating demand for the stock, before finally breaking out of it. If the price corrects, the breakout level (support area) is a good level for the stock to bounce back from.
Weekly Chart of WSFS
#5 MACD Moving above Signal Line: In the weekly chart of WSFS, the MACD line is almost crossing above the MACD signal line. This is usually a good bullish indicator.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can choose either of these options.
- Purchase the shares of WSFS when it pulls back to the support level of $48.
- Purchase the shares of WSFS when it breaks out of the top of the handle at $53.20 with good volume.
TP: Our target price is $65. This is based on the breakout level from the cup and handle pattern.
SL: To limit risk, always place a stop loss. Note that the stop loss is on a closing basis. The SL for this trade depends on your entry level and is as follows:
- Entry at $48: Set stop-loss at $45.60.
- Entry at $53.20: Set stop-loss at $49.80.
Target Potential
- Entry at $48: Our target potential upside is nearly 35% in the next 6 months. For a risk of $2.4, our target reward is $17. In other words, this trade offers nearly 7x more potential upside than downside.
- Entry at $53.20: Our target potential upside is nearly 22% in the next 6 months. For a risk of $3.4, our target reward is $11.8. In other words, this trade offers nearly 3X more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the cup and handle pattern. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any new government rules or regulatory changes in its sector.
Happy Trading!
Tara