The multinational bottling company dedicated to the marketing, production, and distribution of Coca-Cola products, Coca-Cola European Partners PLC (NYSE: CCE) seem poised for a price surge according to its latest charts.
Bullish Indications
#1 Falling Wedge Pattern: The daily chart of CCE shows that the stock has been trading within a falling wedge pattern for the past few months.
[hana-code-insert name=’adsense-article’ /]This is marked in blue color in the daily chart below.The stock had recently taken support near the bottom of this falling wedge pattern before moving up and correcting slightly.
The price can potentially reach the top of the falling wedge and breakout of the pattern in the near term.
#2 MACD above Signal Line: The daily chart of CCE 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.
Daily Chart – CCE
#3 Bullish Harami Cross: The latest candlestick pattern in the daily chart of CCE is a bullish harami cross. This is marked in a green ellipse in the chart. This pattern is a strong bullish pattern and indicates a potential reversal to a bullish bias.
#4 Gap Support: CCE’s daily chart shows that the stock had a gap-up move between February 14 and February 16. This gap is marked as orange dotted lines in the daily chart. Currently, the stock has corrected to reach between the two gaps. This is a good support level for a possible bounce back.
#5 Many supports: The stock also has many supports nearby. There is a long-term support level (marked as a pink dotted line) at which the stock has currently taken support. In addition, there is the bottom of the gap, as well as the bottom of the falling wedge pattern for further support.
Weekly Chart – CCE
#6 Weekly Support at Fibonacci Level: The weekly chart of CCE shows that the stock had been on an uptrend from December 2016 and formed a top in August 2017. Since then, the stock has been correcting. It is now near the 50% Fibonacci retracement level of this move from $30.55 to $44.75. Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before surging back again. So, this 50% retracement level seems like a good support area.
#7 RSI Nearing Oversold: From the weekly chart of CCE, it is evident that the RSI is nearing oversold levels.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase shares of CCE at the current price of $37.90.
TP: Our first target price is $45, the second target price is $55, and the third target price is $60 in the next 4-6 months based on the falling wedge pattern.
SL: To limit risk, place a stop loss at $36.10. Note that this stop loss is on a closing basis.
Our target potential upside is almost 19% to 58% in the next 4-6 months. For a risk of $1.80, our first target reward is $7.10, second target reward is $17.10, and the third target is $22.10. This is a 1:4, 1:10, and 1:12 risk-reward trade. In other words, this trade offers nearly 4x, 10x, and 12x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the falling wedge 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 the sector.
Happy Trading!
Tara
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